My own incomplete thoughts below.
I'm personally of the opinion that the Dems take back the House by a significant margin (I predict a 15-20 dem majority for the next Congress) and the Senate by a slight margin (the Senate was designed as the bulwark against sudden political shifts). Then the fun begins.
Why? Because Dean and the progressive elements in the party are on a completely different track from the party traditionalists. While this will not hurt in 2006, it will become very clear to anyone who cares in 2007/08. At the same time, it will parallel a complete disintegration of the existing social-conservative/ foriegn policy neo-cons/ libertarian-small government alliance that worked to secure dominance of the Republican party in the elected branches in 2004.
Thus, 2008 may see any of a number of outcomes. The emergence of a strong/charismatic leader in an established party capable of drawing wide support, emergence of numerous splinter parties, a completely discouraged electorate producing the lowest turnout ever, strong leaders in both parties, who knows.
But let me stick to the Dems for the moment. The latest fight between the traditional party leaders and Dean is the question of how to spend the money the Dems have collected. Dean has brought in a boatload of money, but has also spent it fast organizing in all 50 states. This is entirely contrary to Democatic Party doctrine, which calls for writing off states with no chance of victory and focusing huge amounts of money into "battleground" states. Further, Dean is creating permanent campaign structures, whereas the Dems traditionally release 90% of their volunteers after an election and then recruit and recreate structure around the state party during election years.
The traditional Dems say that Dean needs to stop his existing strategy and follow doctrine to target key races. With the Republicans vulnerable -- in ways the traditional Dems did not think possible until recently -- they argue the Dems should exploit existing weakness to seize a majority in Congress this year rather than invest in future infrastructure.
Dean initiated the "50 state strategy" when he took over in 2005. He has collected a great deal of money and volunteer effort based on the "50 state stratgey." He has motivated a large number of grassroots activists around the 50-state strategy. The traditional Dems seem oblivious to the impact a sudden shift away from the 50-state strategy would have on the party as a whole.
But the truth is actually worse. The traditional Dems not only hate and fear Dean, they do not understand how the culture renders their standard doctrine (which has not worked for more than a decade) counterproductive. Thus, on one level, the current fight is merely a continuation of the efforts to discredit and undermine Dean by his fellow Dems since he took office -- and an effort to aly the groundwork for eliminating Dean post-2006 if the Dems merely post modest gains but do not take back both houses (the current conventional wisdom). The traditional Dems will say that had Dean focused on critical races, the Dems would have won a majority.
Understand that the traditional Dems allowed Dean to take the top spot in the party in 2005 only because the traditional Dems had no alternative and Dean had the solid backing of the progressives and the parts of the party disgusted with the failure of the traditional Dems in 2004. Further, the "Hilary in 2008" group (aka the "Clintonistas") did not want the only other possible candidate, Bill Richardson, to take control and have an advantage in 2005. The traditional Dems assumed that no matter how well Dean did, he could not win significant gains in 2006, which would discredit him and allow them to install a more traditional Democrat as chair of the party for 2008.
But Dean has spent the last two years completely circumventing the Party's traditional power base. The "50-state strategy" is more than an infrastructure investment -- it is a complete reengineering of the party and its power centers. Rather than relying on the coalition of traditional party bosses and interests, the 50-state strategy creates an independent organization accountable only to the head of the party, and only to the extent the volunteers remain loyal to the party.
So the Dean progressives, in only 2 years, have developed a significant base of money and organizational power within the party that acts independent of the traditional power centers. And the organizational structure cannot be captured because it depends on grassroots volunteers rather than members of organizations or paid staffers. If the party replaces Dean with a non-progressive and refuses to champion progressive issues, the volunteers walk and the money dries up.
Needless to say, this has the traditional dems both highly alarmed and deeply confused. Alarmed because they (a) really believe that a progressive Democratic party cannot win an election because it will alienate mainstream independent voters, and (b) alarmed because they may face significant challenges within their own party for control of the agenda and, indeed, their very seats. Progressives have not been shy about running alternative challengers in primaries in 2006. You can bet this trend will only increase in 2008, particularly if progressives sense that the traditional Dems are trying to cut them out.
But the traditional Dems are also confused because they just don't get how this internet stuff works in politics. The idea of a genuinely empowered electorate that cares about more than voting every 2-4 years, that has interests in issues besides the big ticket social issues of abortion and gun control, and that can track all these things even when they fall outside the mainstream press coverage is just alien to them. They have come to understand that you can get people to give money over the internet, but they don't understand why people give money over the internet. They think it is a bigger and better mail campaign.
But again, the traditional Dems are not going to rock the boat too much when the tide seems to be turning. Rather, they will bide their time and, they hope, reclaim the party after the 2006 election. They assume that the general electorate does not follow such insider baseball and that Dean's vaunted internet strategy will not help much for in-party backroom fighting, where a large number of incumbents have a vested interest in playing by the traditional rules.
Which is, of course, where the fun really begins. Assuming I'm right in my prediction: Dems win back the House by a significant margin and the Senate by a slight margin, the "netroots" progressives will feel (rightly) that they tipped the balance (although they will hopefully remember that they are not the entire party or even necessarily the majority of the party). They will credit Dean and his leadership -- since unlike past chairs of the Democratic party, Dean has been personally involved in the campaign and maintained close ties via email and phone briefings with the rank-and-file.
All in all, it shall make for very interesting times in the next few years.