1. As already noted "end the corruption, etc etc" is always mouthed when Party A replaces Party B as majority. Never seems to stick past the first couple months, if that. I expect the real priorities on the Hill next term will be minimum wage, war grandstanding, probably "investigations" -- and maybe they'll get back to guns by the end of the '07 term. But we'll see.
2. The defection of one out-of-office Congressman doesn't say a thing about the state of the party as a whole.
3. The defection of many, many rank and file MEMBERS of the party DOES say quite a bit about the state of the party. I've lost count of how many local people (not to mention national commentators) who classify themselves as "generally conservative, No Longer Republican." Spending and border control issues seemed to be the biggest wedge issues within the party, though the first cracks appeared as early as the Medicare drug benefit back in W's first term.
At this point, the GOP is indeed on a rapid downhill slide. They've lost the complacent middle with the war, and they've lost a good deal of their base abandoning their principles.
At this point the best option I think would be a mass defection from the GOP from many well-known conservatives with existing clout, recognition, and seniority. Defection as in bandoning their party membership and re-coalescing into a new party based on actually walking their own talk. At this point the GOP has fouled their nest pretty bad.
Then again, the DNC will be in just the same place in six years or less.