Ultimately there are a lot of variables and we will be in a better position to judge this in 4 years.
I do think Rudy can modify his stand on guns and abortion enough to appeal to most americans. He will remain pro choice but come down well on the front line issues of 2008 for abortion.
He will have an easier time doing this than Hilly, whose political posture presents a much narrower range of options on these issues.
Your fixation on Edwards is misplaced. First, Edwards isn't a billionare (I don't know where that came from), but as I said it won't matter. He is out of a job in Janaury 2005 and I don't see him staying in the public eye that long as a credible candidate, especially since Hilly wants it so badly.
So it won't be Edwards, and it will be NY Rudy vs NY Hilly (if it is indeed Rudy, of course) - the dynamic you mentioned cancels itself out.
Wait and see.