Paul Waldman has a nice post today about GOP "rebranding." He's quite right: ideological shifts, real or perceived, do far less to explain electoral results than basic economic performance and other "retrospective voting" things.
In particular: I think it's very likely that a Democrat would have won in 1992 even if there had been no DLC. And I think that at best Democrats have a very narrow national advantage based on perceived Republican extremism, almost certainly smaller than the presidential vote margin in 2008 and 2012.
However, as I've said before: that doesn't mean that party reform isn't necessary. If it's really true that Republicans have become "post-policy" -- both indifferent to public policy choices in many cases, and incapable (or at least severely challenged) in devising complex policy -- then their ability to govern will be compromised. Indeed, in my view, that's a large part of what went wrong during the George W. Bush years. To begin with, Republicans nominated a president ill-suited for the policy demands of the job without apparently seeing the dangers in that; once he was in office, a Republican Congress too often abdicated its own policy role missed opportunities to nudge the party back on course when policy disasters were looming.
To put it bluntly, I think Democratic success in 1992 and 2008, and Republican success in 1980, was basically an accident -- but Republican failure in 2008, and perhaps Democratic failure in 1980, was no accident at all.
(1980 is tricky. That Carter was a failure of a president was no accident, as Nelson W. Polsby argued in Consequences of Party Reform. But I'd say it's very much open for argument whether the process which produced Carter's nomination was a consequence of a broken Democratic Party or, perhaps, just a fluke of history. Regardless: I see no reason to believe that Walter Mondale in 1984 or Mike Dukakis in 1988 (or Gerald Ford in 1980 or perhaps Bob Dole in 1996) couldn't have governed successfully).
And I think it would have been very difficult for a Republican elected in 2008 or 2012 to govern successfully.
So, I do think that Republicans desperately need to reform. But not in order to win.