I think in the coming decades, the 'Rats will join the Greens, and become an insignificant ultra-leftist fringe group and the GOP will be centrist to liberal.
People like us will go in two directions. Some of us will become Libertarians and many more will be part of an emerging strict-constructionist Conservative party.
I forsee a similar future. I think the Democrat party is effectively dead already. I don't see any way they adopt any sort of sensible politics without alienating large parts of their already-fractious coalition. I don't see any way to reconcile the anti-war cowards with Zell Miller Democrats (or even Joe Lieberman Democrats); I don't see any way to reconcile religious blacks with the militant homosexual agenda. The Democrat party is doomed, their time is clearly past with all their major policies proven failures.
Which leaves the GOP sitting pretty for a while. Naturally it will continue to move left, as being in control of the government provides the GOP with an incentive to increase the power of the government. The Libertarians won't be the alternatve that arises; they're too filled with kooks, crazies, implacable idealists, and nihilists. Some form of Constitutional constructionists or taxpayers' party seems to be the most likely to arise as a second national party.
There has been a conservative and a liberal wing of the Republican Party since the 1870's. It has always been a struggle for control by the opposing forces. If you read the history of the Republican Party it's interesting to see that, for the most part, we were in the majority and wielded the power when controlled by the conservative wing. When the party was controlled by the liberal wing we never were able to gain majority status. If we don't learn from this we are doomed to repeat our past failures.
Bush has been stronger on social conservative issues than fiscal conservative issues, I grant you.
What I have particularly noticed, in line with what you say, is that segments of society that used to be conservative are now liberal. I think especially of the privileged classes and old money families of the two coasts. People with ancestors who came over on the Mayflower, people who used to run the country.
The families who sent their kids to prep school when I was a boy were almost all conservative, and so were most of the older families, although I knew a few flaming liberals even back then (I'd better not name them). But now, almost all the old blood and old money came out for kerry in the last election. The people who supported Bush were just ordinary folks without those elitist pretentions.
In a way, that's hopeful. The Republicans used to be the party of the rich and powerful, the country clubbers, and the Democrats still pretend that about them in their propaganda, but it's no longer true. The Democrats are now the party of privilege, with their welfare dependent servants; the Republicans are increasingly the party of ordinary people who raise families and work for a living.