I would hardly say that Bush lost. First, as pointed out ad nauseam, he wasn't running. Second, what to make of Lincoln Chafee, one of Bush's strongest opponents on Iraq, and lost anyway. And what to make of Joe Lieberman, one of Bush's strongest supporters on Iraq, who won anyway?
No, the issue to me was that the Republican Congress was behaving just like the Democratic Congress they replaced. The lack of program, the uncontrolled spending, the scandals, the protectionism, etc etc all suggested a party that had lost touch with the people who put them there. They deserved to lose. The worst RINOs are probably finished, and good for us. The party can sit back and consider what happened and return to Reaganism, just like in 1994. Overall I think that the new Congress wont get anything done, especially an AWB. And the Republicans will get their act together for '08.