The reason why I believe Thompson actually has an excellent chance at winning it all is because he doesn't come across as some fire-breathing right-wing caricature. To use an over-used comparison, like Reagan it is his personal presence that impresses people who may not agree with his politics. He seems rational, so whatever stance he takes on Iraq would seem to observers as something he came to with thought and honesty, not as something he NEEDED to do for political or personal reasons.
More importantly, and to your point above, he can run without making Iraq the whole of his candidacy. If needed, he could point out that he isn't coming into this with past political baggage like HRC or Edwards. I don't think it will come to that.
Similarly on healthcare, which I think the Democrats are making a huge mistake with (they fear being reminded of Hillarycare, so they are doing the generic "We'll just change things for the better, don't get bogged down in plans" routine), he can come across as rational, not some sloberring fanatic the way the Dems do on the environment and healthcare and "two Americas".
I think in 2008 the Republicans CAN win, but, and this won't be music to FReepers' ears, we are signing our own suicide note if we put our trust in a podium-pounder. We simply don't have that much credit with the average voter to burn it up on personalities.
The answer is for the Republicans to offer Conservative ideas as the best alternative to Liberal ones. I fear the prescription drug plan, immigration and Katrina are all potentially fatal bodyshots.