Your first assumption is that there are seven competitive seats, and that they are the ones you mention. You ignore any chance that any other seat (27 more up) will change hands.
You then assume that the four Democratic seats are just coin-tosses with no trend. You also assume that Arkansas is such a coin-toss, but seem then to put Republicans ahead 60-40 in Colo. and NH.
Colorado is a big difference between me and you: I would call this a near-certain keeper for R: in fact the chance of losing OREGON is greater than that of losing Colo. On the possibility of Republican losses, then, I would give us a 40% chance of losing Ark, 40% col NH; but only 30% ch of los OR and 20% ch of los CO. Of the four, we expect then to hold (.6+.6+.7+.8)= 2.7, a loss of 1.3.
Even more importantly, the four Democratic poss-losses you cite are really PROB-losses, goners. I would say only a 10% chance Dem can hold SDak; 20% MO; 30% MN; and 40% NJ. From the four, then, we expect to pick up (.9+.8+.7+.6)=3.0.
That sums up your seven and adds one possible other State where R could lose, Oregon. Eight states so far in play; net gain 1.7.
I would add Iowa as a tossup, 50-50; and then say that Georgia and Montana are only 60-40 ahead for D; and Louisiana and Illinois only some 70-30. From those five expected gain is (.5+.4+.4+.3+.3)=1.9.
Thus I have a total of 13 states in play, not your seven.
I would then say that there is a 50% chance some other imponderable place will switch D to R; 25% that two such will; one-eighth chance that three will, etc. This means an expected R gain from this term alone of (.5+.25+.125+.0625...)=1.
Overall, then, gain is (1.7+1.9+1.0)=4.6.
The entire calculation of the chance that R fails to gain 0.5 or more (remember roundoff) yields only some 3% as compared to 8% the last time I had done it-- Missouri and Texas had not looked so good for R as they now do.
Thus the chance we DO gain one or more is some 97%.
Now, someone out there may say that just as you are too pessimistic, I am too optimistic. While I feel I am right-on, if the truth lay halfway between us on each of the individual states we would still get to around an 89-90% of the gain of one or more.
This is really the crux of our differences. You are correct that I believe these assumptions to be extremely optimistic, just as you found my 50/50 assessments to be extremely pessimistic. I have tried to base my assumptions on objective information as much as possible. Independent polling in all four of these states are well within the margin of error -- Thune typically has a 2-4 point lead in SD; Carnahan has a bigger lead than that in the majority of MO polls; MN appears to be dead even, as does NJ. A recent AR poll shows the GOP incumbent down by 8 points. These are the reasons I consider these races to be toss-ups, and why I cannot in good conscience consider the GOP to be a 90% favorite in SD, or an 80% favorite in Missouri. True, polls can be wrong. But not to the extent of 50/50 vs. 90/10. For comparison, the Political Oddsmaker puts only 3 Senate races at 90% or greater odds: Cochran in MS (95/5), Warner in VA (90/10) and Rockefeller in WV (91/9). Even John Kerry in anti-Republican MA (88/12) doesn't rate that high!