1. No. I believe the current state of the Democrat Party to be nothing short of a disaster. It is bad for Dems, and it is bad for Republicans as well - Having a disloyal and vile opposition creates an opportunity for the GOP to slide into disgusting habits of its own.
2. I "change" that party one person at a time, through long-term interaction and rational discussion.
more broadly, the best way to change the Democrat Party is to kick its legs out - getting substantial numbers of their "core constituencies" to at least think about their blind devotion and evaluate their options is a start in that direction.
A problem with your second answer: the conservatives already knocked the legs out 20 years ago. Most who were inclined to leave already left.
The Democratic party circa 2004 still can be said to represent 30-40% plus of the US population. Not greatly different than 20 years ago.
The Democratic party isn't going away. It's core constituencies have changed somewhat, but they're still there.
I would think that people would have to be dissatisfied by the status quo before they would be looking for options. What leads you to believe that the core constituencies of the Democratic party circa 2004 are dissatisfied?