Scorthed earth. In 2004, everyone gets whooped and the dem party is a disaster. Gives Hillary time to screw around in the senate as a moderate or something, gives seperation time to her from the past, while keeping her in the lime light.
In 2008, she can have a solid national network set up, all the campaign donors in her pocket, be hailed as the savior of the dem party, and run in a pretty much cleared out primary.
I don't think the Clintons so much as want somone to win in 2004, as much as they want somone loyal to them to lose in 2004. Edwards has been taking alot of advice and help from the Clintons. Dean would go down, but he would control the party, Kerry isn't a clinton puppet (he's property of the kennedy's), Edwards losing in 2004 leaves the party in the hands of the clintons.
I think you are very close to the truth here.