Inglis' lack of money forced the national GOP to play a major advertising role in the race. A state party ad criticized Hollings' record on welfare reform and used old footage of Hollings seeming to dismiss public opinion."
That's from the CNN article you linked to. A couple of factors why Fritz's career is on the fritz:
1. A lot of new voters have moved into South Carolina in the past 4 years, and more will in the next 2. These voters are more likely to see Hollings as an old fool (and too old for another term) rather than an 'institution'.
2. A lot of yellow dog democrats have kicked the bucket or switched completely to the GOP in that same time.
3. There was a Rat tide in SC in 98, when Jim Hodges, of all people, won the governorship!
4. All that considered, Ernest Hollings only won 53% of the vote.
5. Jim DeMint will be more than fully funded in 2004 and will have Dubya at the top of the ticket.
For all those reasons, Hollings is the most vulnerable Rat incumbent, and will probably go down in flames or just give up the ghost and retire.
Regarding your point about an open-seat battle, Sec. Education Inez Tenebaum is generally regarded as the strongest Rat who hasn't jumped ship. She's the ONLY Rat holding statewide office. But she's personable, a woman, and for education (well, who isn't?)
I was looking at the SC Democrat Party page and they seem to be pretty clueless in recent elections. The site is very openly liberal/socialist, calling Nancy Pelosi a "model" for SC, pandering to hispanics with an "La Traducción Española" section, etc. Traditionally, 'RATs win in the deep south by running folky campaigns and PRETENDING to be "socially conservative", while proclaiming they are the guidanians of the blue-coller "working man", etc.
According to the politics1.com site, there are three Democrat officials still holding on statewide office in SC:
STATE TREASURER: Grady Patterson (D)
STATE SUPERINTENDENT OF EDUCATION: Inez Tenenbaum (D)
U.S. SENATOR: Ernest "Fritz" Hollings (D)
That gives them a small base of power to work with. However, being a multi-term statewide official does not gurantee you any success in running for other statewide positions, as the Illinois GOP should have figured out this year when they ran Attoneny General Jim Ryan for Governor and lost miserably. If you say Tenenbaum is the most popular of the three, the SC RATs will probably find a way to get her to run. With the Senate 51-49, they cannot afford to lose anymore ground in "Bush states" and they are probably plotting their comeback in the south after getting their butts whipped this year. Graham's election in 2002 was a foregone conclusion and Sanders ran a good "folksy" campaign but the 'RAT party didn't even bother to help him. Hollings is a mean ol' entrenched incumbant though. Hopefully, your statistics on his even shrinking "base" will prove correct and SC votes will finally toss him after seven terms.