Eh, if you think the media would report it as you state, I think you're underestimating the damage that could be done. The report would mention months of violence and Bush's refusal to term Arafat a terrorist all this time. Course if you think they'd spin this for the Republicans then I could be wrong.
Granted, the liberal press won't spin it for the Republicans. But that's nothing new. The question is whether their biased complaints will connect with the great middle. I doubt that the average American would get all bent out of shape about Bush not labeling Arafat evil soon enough or that Bush didn't abandon attempts to use diplomacy earlier.
My sense is that Bush's political advisors are more concerned with avoiding being a lightning rod for something that would antagonize the average voter, than they expect to pick up many hard core Democrats. In other words, I don't see the Demos getting much traction here.