The liberal contortions that Mark Warner will have to do to get the DemocRAT nomination in '08 will make him un-electable in Virginia. He's popular because Virginia voters don't realize how much of a leftist he is. I'll give anyone odds that Allen will beat Warner in Virginia if they are both nominated.
I think you hit the nail on the head there. Moderate Ds will never get nominated by the Ds as Moderate Rs will not get elected by the Rs. Fringe candidates win as that is who makes up the majority of the respective parties' primary voters.
Clark didn't win the Democrat's nomination. McCain didn't win the Rs. The crossover voters that would probably get these people elected generally don't go to the polls for primaries.