There is no room in the GOP for moderates or RINOs any longer. We saw the result when the GOP fields a moderate candidate for president.
The Party needs to offer a choice from the Commie Democrats. The only way to do that is to stick to traditional Republican (and American) values of capitalism, individual responsibility, Judeo-Christian morality, strong defense, law and order, and fiscal responsibility.
You may very well be right that moderate republicanism is not the answer. But I’m not so sure that the US population, as a whole, isn’t moving away from conservatism as well. After all, the GOP may have fielded a moderate candidate, but they sure didn’t field a moderate VP - and the evidence suggests that Palin may have frightened off some of the swing voters that the GOP needed to win the election.
If this is so, then conservatism is going to have to be packaged a great deal more effectively than has been done recently.