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Actually, I think a President Hillary is not at all unlikely. Here's why:

Let's assume, for arguements sake, that all of the following is true in Jan. 2008:
1. Iraq is pacified.
2. Bin-Laden is captured or killed.
3. The war on Islamic fundamentalism continues, US troops are engaged in: Iran/Syria/Saudi Arabia/Pakistan/Yemen/Sudan/Somalia (choose any or all).
4. There have been additional terror attacks in the continental US, therefore the war against fundamentalist Islam is no longer controversal, but an accepted part of US foreign policy. (All Democrats of course lie when they say this but say it they will.)
5. Bush of course cannot run again. The republicans are split between Jeb Bush and Condoleeza Rice/Colin Powell. Dick Cheney is too old, as is Donald Rumsfield.
6. Having been a minority party for so long, the Democrats are utterly desperate. They will do or say anything, follow and obey anyone, anyone at all, who promises to restore them to power.

Now:

7. Hillery by now has a reputation as an experienced senior senator. She knows what to promise to buy votes from the AARP, the congressional Black and Hispanic Caucuses, labor unions, federal workers, etc. Basically, she promises to buy votes with tax dollars - often a winning strategy.
8. Bill's crimes have been long forgotten. He is simply known as the senators husband. (Bill will do anything Hill says to get back into power too, of course).
9. Hillery unites the democrats and promises to stay tough on terrorism.

Then:

10. The divided Republican ticket is defeated at the polls.
11. Presto. President Hillery Rodham takes over.

Actually, your kind of wild-eyed speculation is exactly the kind of pundit-driven nonsense I was referring to. After your first three reasonable assumptions, the rest of your assumptions and scenario degenerates into poppycock.

I assume that there will probably be about 35-40% of the people of this country that will continue to support the Democrat party because of their vested interest in doing so; government employees, union members, the radical chic, etc. But the rest of the people are aligning with the Republicans in every major area. I expect this trend to continue.

I also believe, after all we have seen in our recent lifetimes, that putting Hillary ANYWHERE NEAR the candidacy would energize the opposition to her, and the Democrat's, LIKE NEVER BEFORE. The extreme left-wing of this country may cream their jeans at the thought of her running, but I would bet a week's pay that should such a thing happen, it would truly be the death knell of the Democrat party.