The Democrats can write off the South, like the Republicans used to. They very nearly won an electoral college majority in 2000 and 2004 with no Southern states...winning New Hampshire in 2000 (which Bush carried by 7,000 votes) would have given Gore the magic number of 270 electoral votes.
Actually, they can't write off the South. Since Arkansas became a state, never, and I mean never, has a Democrat been elected President without winning Arkansas. Hillary was never popular in that state, because while for everything else, Bill was one of them, Hillary never was, and she could never act like she was. Bill's popularity in his gubernatorial days hinged on keeping his wife in line, which he did fairly well from 1983 on.
The reason I think that they do nominate a Southerner is because they're not writing off the South, they want Arkansas, they want West Virginia (if Kerry had won just those two states, he'd be Presidents), etc. I suspect Kerry only won New Hampshire because he was, in spite of all else, a New Englander.