For the first time in a number of years, Liverpool have been spoken about as genuine title contenders this season.
They have two of the Premier League's most prolific forwards in Luis Suarez and Daniel Sturridge, not to mention the support acts of Philippe Coutinho and Raheem Sterling, but Redknapp believes fitting in the in-form quartet could prove a problem for Brendan Rodgers.
He told Sky Sports: "It's an exciting time for Liverpool fans at the moment, not least because of the brand of football Brendan Rodgers' men are playing on the pitch.
"When everyone's fit, Liverpool have got more attacking options than they've had in an awfully long time and in Daniel Sturridge, Luis Suarez, Philippe Coutinho and Raheem Sterling they have players that can win you matches.
"Against Stoke last Sunday the game was getting stretched and Liverpool's attacking style left them open at times but it's great to watch and I think that's what Liverpool fans want.
"For a few years under Rafa Benitez and Gerard Houllier that wasn't the case; during that time Liverpool wouldn't throw men forward like they do at the moment.
"The form of those forwards leaves Rodgers with a dilemma this weekend, though. Does he, at home against an Aston Villa side struggling for confidence (who Liverpool are 2/9 to beat), go with both Sturridge - who scored on his return from injury at the Britannia - and Suarez?
"That could mean benching Coutinho, who has done really well while Sturridge was out or replacing Jordan Henderson, who's been in great form, or maybe Lucas.
"Because Liverpool aren't involved in Europe they have got the luxury of playing Saturday-Saturday or Saturday-Sunday. Although that gives players the chance to rest, recover and get ready for the next game, it also causes you a problem because you can't give everyone game time.
"It's a tough decision for Rodgers but essentially it's the sort of problem he wants to have."
Liverpool did top of the table last month but back-to-back defeats to Manchester City and Chelsea in December saw the Reds fall off the pace.
They are now six points behind Arsenal but remain in a Champions League spot going into Saturday's game against Aston Villa.
Despite the confidence in the Anfield camp, Redknapp suspects Rodgers would take a fourth-placed finish if offered it now.
He added: "Liverpool have been getting good results despite Sturridge's absence and people are talking about them being in the race for the title.
"That's where they should be and what Liverpool fans want - but this is unchartered territory for a lot of their players.
"I wonder if Rodgers, deep down, would take fourth place and a Champions League spot now. My guess is he would.
"We all want to be successful in football and last week Samir Nasri said Liverpool are the best side City have played against this season.
"But, if you consider where Liverpool were at the start of this campaign, finishing in the top four, given the quality of the other teams going for a Champions League spot, would be a good achievement for them.
"There's Chelsea, who have spent an awful lot of money, Manchester City, who are incredibly strong and getting better and better, an Arsenal side in a great position, Tottenham, who look like a better side under Tim Sherwood, plus Everton and Manchester United, so a Champions League spot would be a real mark of how far Liverpool have progressed this year.
"Liverpool have got Arsenal, Man City and Chelsea to play at home, too, which gives them a chance of scoring some vital points over some of their fellow top four challengers.
"However, there's a long way to go and a lot of tough teams to overcome."