I think this election is the Dem's bottom, and we're already making a little progress at the state level.  In fact, I think if the Dems play their cards right and do the right things, including learn from the Republican organization, this election could be the catalyst to turn the party around.  We're (I hope my use of we don't offend people who don't agree with me, I speak as a Democrat.  I'm willing to hear everyone else's opinion out, but this is my plan) very vulnerable right now, but if we stick together and conserve our strength, this could be the route to a lasting majority.

I am firmly convinced that the GOP will implode within a decade.  (Cognitive dissonance, internal power struggle, Pottery Bar rule for people who can't fix jack shit, and a major major case of buyer's remorse for everyone involved).  In the meantime, I think the Dems need to make some major philosophical and organizational changes to prepare themselves for their role as the opposition party and win big when the GOP blows up.

Below the fold are some specific points I've thought up.  

I haven't seen this expressed directly, so I'm just throwing this idea out here.

Is the difference between Bush voters and Kerry voters their objects of fear?  I think 9/11 has hit Bush voter's world view a lot harder than it hit those of liberals/cosmopolitan people.  A lot of liberals have absorbed the lessons of the civil rights era and Vietnam, and learned that Americans have much to fear from themselves.  We know that our actions as a nation can be wrong.  So the hatred and fear behind 9/11 was a little easier for us to understand.  

Thus, Kerry voters find Bush's bungling and overreaching in Iraq to be obvious and scary.  They're also more willing to believe that terrorism is a crime and can be contained through policing actions.

Main points below