I think that's a horrible idea. They were clearly more successful as a mass-appeal centrist party than as this catch-all for undesirables that they are now. Who do people want to run in '08? Moderate Democrats. Pushing the party further to the left to appease their hodgepodge of stoner teens, welfare queens, Earth nuts, socialist academics, gays, angry blacks, self-hating whites, and all those other marginal portions of society is not a winning gameplan.* Democratic darlings Kennedy and Clinton were pretty moderate; Clinton was the biggest advocate for NAFTA, after all. Red state/blue state is bullshit: most of the country lies very much in the middle of things. You go after moderates, you win. You sit in the corner and bitch "well this election will be stolen from me anyway and we're smarter than you so we get the moral victory," you lose.
*Note to Republicans: pushing the party further to the right to appease Jesus freaks is not a winning gameplan either