The Republicans have an uphill battle against the Democrats this year, no question about it. Barack Obama is an amazing orator, the economy isn't doing too well, and President Bush and the Republican brand are extremely unpopular. Fortunately, for those on the right, there is hope, assuming the GOP uses a strategy, sticks with it, and other issues fall into place.
Before we begin, lets be upfront - John McCain isn't the chosen candidate of conservatives. They don't like his maverick style and willingness to work with the opposition - something liberals wouldn't like if the roles were reversed, but independents love. With the talk of both Ralph Nader and Bob Barr polling well, third parties are feeling good. But voting for a third party is still like wasting a vote. With the exception of Ross Perot in 1992, there hasn't been a "successful" third party candidate arguably since Theodore Roosevelt.
With that being said, the Republicans need a clear message, and some luck to win in November. If executed properly, assuming they don't destroy the country, they can build a strong conservative backbone for years to come.
As it stands now, McCain has the foreign policy experience that Obama simply can't try to compete with, even with Wesley Clark's recent comments. The War in Iraq is the one consistent issue where Americans feel John McCain is better suited to be President. Run with it.
However, McCain's economic background took a hit when he claimed that economics was not something that he understood. With the economy doing poorly, and consumer confidence down, the perfect running mate to complement McCain's foreign policy experience, is a savvy businessman like Mitt Romney. Had the economy in January and February be what it was now, I have a feeling Romney would have received the nomination. Romney has the best business background of nearly any Presidential candidate and has been successful with everything he has been involved with. He has helped to turn around major companies such as Staples, Domino's, and Brookstone, while also taking over the $379 million shortfall of the 2002 Olympics, then turning it into over $100 million profit. Needless to say he knows how a business works, and if anyone can help McCain balance the budget in the next 4-8 years, it will be Mitt. Romney won't help McCain in Massachusetts, but could help my swing state of Michigan with his ties to the state (Romney's father, George, was governor of Michigan from 1963-1969.) It doesn't hurt that he also won the Republican primary here.

McCain's age is definitely an issue, which is why Romney would be a better choice than the highly regarded governor of Louisiana, Bobby Jindal. As much as I like and respect Governor Jindal, he is simply too young (Age 37) and inexperienced which is one of the attacks used against Obama. Given McCain's age in relation, voters will want to be confident that the person only one step away from the Presidency is ready to step into the role. The choice would also have consequences in the sense that the opponents would compare McCain to Jindal in terms of age, citing Jindal being half the man McCain is, resonating with voters.
Jindal is definitely a rising star in the Republican party, and McCain will most likely only serve one term. This would leave the door open for Romney to run as President, presumably on the economic turnaround he engineered, and put Jindal in the number two slot. Romney could then build on his successes, and run for a second term, leaving the door open for Jindal to run in 2020 at the more experienced age of 49.
As stated before, this isn't something that will likely happen unless all of the cards fell into place. Defeating Obama won't be an easy task, but this election appears to be focused on the swing states, even if Obama appears poised for a blowout. The electoral map will likely be similar to that of 2004, with a few minor changes.
I suspect that McCain's best, and possibly only chance to surpass Obama, is during the debates. Obama is an excellent speaker, but doesn't have the experience or record to go in depth on many issues. Talking about hope and change might work for commercials, but eventually voters will want to see a concrete plan of what he stands for, how he will handle issues, etc...Should McCain prove to make him look foolish in national debates, the Obama train may finally derail. That possibility is why Obama hasn't committed to the townhall debates with McCain. He has nothing to gain at this moment, and everything to lose.
Executed properly, the Republicans can see much more time in the White House. Until the election draws to a close, we can only wonder.