I've been on the Santorum bandwagon ever since the election, and hope he does through some miracle get the GOP nod. The only problems are Palin and Huckabee, who take up most of what would be his base.
You forget some other problems:
1. President Obama. Slickest politician since at least JFK.
2. Election 2006. He couldn't win his home state when America was genuinely "moderate". In fact, he was absolutely crushed in the firmest defeat of an incumbent Senator since George McGovern.
3. As a GWB stooge, he will have a big handicap in 2012.
He was talking about the primaries, not the general. The only one of those three things you mentioned that matter is his loss in 2006, and you're characterization of America being moderate then as if it wasn't a huge Democratic year is crazy. He was very conservative in a left leaning state and the media had gone out of their way to destroy him(extreme mis-characterization of his homosexuality remarks, PA media being totally against him and very soft on his opponent). Not to mention the fact that his opponent was the son of a semi-saint in PA. Santorum campaigned his ass off while Casey barely showed up on the campaign trail(much like how he never showed up to his job before becoming senator). Santorum has done and said some stupid things, but he shouldn't be ashamed of that race. The people of Pennsylvania made the wrong decision and elected the wrong guy; regardless of how you feel about him, he brought a ton of cash back to PA and spent plenty of time there(despite the disingenuous attacks on his living arrangement).
As for #3 on your list, I don't think the fact that he had 16 years in the congress, even if part of it was under the Bush administration, is going to hurt him against a 4 year and a 2 year governor. Republicans aren't going to lash out at him for being a Republican in Washington while Bush was in office, it's not in their nature..