Good news is that the Democrats will rip themselves apart on the Iraq war and cut-and-run. Also, there is pressure from the base on Democrats to impeach Bush and cut and run, and to cuttle Iran and North Korea.
I think the impeachment will rip them all apart, because there simply isn't any big interest in that. In two years the Republicans will have the House back, and will gain in the Senate, simply because there are just two ways to go (as you noted) -- one, straight obstructionist with interminable do-nothing hearings on Iraq, with an undercurrent of cut and run, with a topper of impeachment; and the other, working to address other things, such as not renewing the tax cut (which has helped me, and I'm certainly not rich) in order to impose even more spending, including staying put in Iraq.
The Lamont-Lieberman struggle (plus Kerry's newest bashing of the military) was a preview of the next few years, and will culminate in a crippled Dim ticket for the presidency in 2008, and (despite the opposition and misgivings around here) an MOR candidate from the Pubbies which will prevail.
Before 2012 Ted Kennedy will either die or retire from the Senate for health reasons (or both).