He will never get the Democratic nomination again. Kerry is the only candidate on Earth that couldn't beat Bush, the Dems remember that kind of thing. Plus, it will be much more crowded field. If Kerry runs he'll be dealing with the likes of Mark Warner, Hillary Clinton, Russ Feingold, and other tough primary opponents...he wont have the lucury of going up against Dean, Edwards, and Lieberman.
I wouldn't necessarily say that's true. Bush's percentage of the vote was pretty much equal to his approval rating. If Kerry had been so awful, he would've lost in a Goldwater/McGovern fashion. You make it sound like Bush had 30 percent approval ratings at the time of the election or some such.
I agree that a better Democratic candidate definitely could've won, but Kerry ended up doing as well as a Democrat would normally be expected to do given the national environment at the time.