"You have awakened the sleeping giant..." Yeah, heard that before the 2002 election.
That was supposed to be the vengeance for the 2000 election. Republicans picked up seats. The Democrats unloaded everything in their anti-Bush arsenal before the 2004 elections, including the exact same meme of a losing war. Bush won, picking up more votes in almost every category of voter than he had in 2000.
I would bet that in 2008 the Democratic Party is going to do the same thing they did last time, i.e. placate the Left during primaries, and then pick someone more toward the center. Hillary sure as hell thinks so.