Rhode Island is not as hopelessly Democrat as you suppose, and it is not averse to electing moderate-to-conservative Republicans such as Laffey---in fact, Governor Carcieri is no less conservative than Laffey, and he was elected with 55% in 2002. Kerry is from next-door Mass., and he got 59.42% in RI. For the sake of comparison, President Bush got 62.86% in North Dakota in 2004, and that hasn't stopped liberal-to-moderate Democrats Conrad and Dorgan from being elected to the Senate.
Laffey will be the underdog against Whitehouse, but I think he's got a shot at the upset. Pay no heed to polls taken before he defeats Chafee; the general election campaign won't begin until the day after the primary.
If this were an open seat, I'd agree that Laffey would have a shot. A very small shot, but a shot.
But if he wins the primary, he'll have unseated the 'moderate' Republican, and will be decried by the media as an 'extremist' etc. I don't think that, given RI's tilt, there is any way he can overcome that, especially over Whitehouse, who's already won Statewide before.
Thanks for your clear headed thinking. People don't know him so much yet, but they will like what they learn.