According to PollingReport.com George W. Bush's approval rating is at 26%, as of November 1-2, 2008. American Research Group puts his approval rating at 20%, as of the end of October, 2008. It's no secret that the American people are sick of George W. Bush and his failed policies. This reflects badly on the Republican party as well, as many members are switching to conservative third parties such as the Libertarians and Constitution Party, both of which more accurately reflect the values of the old (pre-Regan) Republican Party. Many more Republicans are breaking party lines and voting for Democrats, while still remaining technically Republican. The disgust with the Republican Party was also well-illustrated in the trouncing that John McCain took in the November 4th Presidential Election, which showed traditionally Republican states supporting the Democrat Party - states such as Virginia, Florida, North Carolina, Indiana, and others. Missouri is still too close to call, but is leaning towards McCain by two tenths of a percent, according to AP. Missouri's decision could come down to a small handful of votes as absentee and provisional ballots are counted. The Republican Party needs to do something, and soon.
Frankly, the GOP is headed towards a major fracturing. Remember that the majority of the members of the GOP are old-school Republicans that remember the pre-Regan (and pre-religious right run) party. Many Republicans do not support the direction that the party has taken.
Here's what I see happening:
The GOP decides that a return to more traditional conservative values will be in its favor. They bring a leader to the forefront that actually fully believes in the original thoughts of the Republican Party, back when Abe Lincoln was President, and the Republican Party supported equality, small government, and policies based on the needs of the people, instead of policies based in the bible.
This will cause the fundamentalists and religious extremists to go ape-shit over the change in policy. They break off from the party and form their own party, likely named something like Moral Republicans. As the religious extremists and fundamentalists are, even today, a minority within the party, the new religiously-based "Moral Republican" party will likely die out or be shuffled off to the fringe, leaving room for the traditional Republican Party to take over, likely with someone like Ron Paul as their leader (though I doubt it'll actually be Ron Paul, but rather someone younger who shares his politics).
Ultimately, I see the Republican Party being forced to return to its old core values, which will once again make it a party with some sway and respect in America. It is then, and only then, that the Republican Party can truly return to power in the US. Ironically enough, I would also wager that if this were to occur, the Libertarians and Constitutionalists would be losing members to the GOP, instead of the other way around.
This change will not occur overnight. It may take several years, but I truly think that it will happen.
The other option is that the GOP refuses to change, continues to lose support, and a third party rises in its place - one that is willing to adhere to the conservative values the average Republican wants. This route would likely take a lot longer than my first suggestion, but it would happen eventually - likely well within most of our lifetimes. I don't really foresee this route being likely, as the current Republican Party doesn't want to lose power, and will likely see that they must change if they want to retain their status as a major party.