This will be the next big issue for the 2008 election. This has to be solved. We will make some reforms before then, but they will be largely cosmetic. It will take a major push to make the change.
Our biggest problem is trying to take the issue out of the realm of "racism". Buchannan tried to push this issue in 1998, but was painted as a racist. We have to treat it as a national security issue, but critics will use the race angle for leverage.
I think the best approach is to target the border populations that face the problems with illegal immigration (TX, NM, AS, & CA) and get them (Congressmen, Senators, & state legislators) to raise the issue as a national security issue. There is some recent effort to do this already in CA.
Unfortunately for conservatives, Hillary Clinton is making the issue of illegal immigration a big one for her own benefit...
Where Republicans are on this issue is just silent. It certainly has a lot to do with that "available worker" issue for many Republican-owned businesses, which is a shame because they're engaging in a an option a lot of the rest of us don't respect (employing illegal immigrants because they're cheaper [for the employer in the immediate] than American workers [who are more valuable to the country for many other important reasons).