He's a dream candidate all right. But what you need is not a dream candidate, but a better governor.
If Tom ran in Texas or Colorado, I'd gladly support him. If he ran in California against only a Rat, I'd support him even more gladly. If his numbers were better than Cruz's and Arnold's, I'd be jumping in joy to support him.
Unfortunately though, Arnold is more popular, which makes it pretty difficult for Tom to win. Chances are that either Arnold will win and we'll have a non-dream, non-nightmare governor--or Cruz will win and (let me not even think of that). Once a candidate has lost an election, people tend to turn away from him very fast--witness Simon's fate.
Tom could withdraw now and run in the next elections, after Arnold's more responsible policies have increased the popularity of Republicans among Californians. If he runs and loses now, he won't have that chance anymore. That would be pretty much of a waste of a great political talent, wouldn't it?