The direction of the Republican Party if McCain loses

[NDN]

Scenario 2: McCain loses narrowly, President Obama begins to sag under continued public disapproval of all types of Government, and has an approval rating of 40%. 2010 is a disaster for the miffed Democrats and the revitalized Republicans make gains. A conservative Republican, possibly the 2008 VP candidate, defeats President Obama in 2012.

Option 2 seems far more likely, which is part of the reason I'm starting to dread an Obama victory now.

[NDN]

Necons fade in favor of Paleocons, the big wigs in the party become Jindal, Palin, Mike Pence and John Thune.

Most of the people on that list are huge hawks & free traders so no.

[NDN]

The only populist/protectionist sentiment exists within the democratic party (and really only half of the party supports this). I have never heard once a republican (that I know of) talk badly about free trade.

There's plenty of Republicans who take a moderate or anti free trade stance. Like Bob Smith, Tom Tancredo, and Mike Huckabee to name a few. The more solidly pro-Free Trade/neo-Liberal bent of the party is a relatively recent trend which could easily reverse itself.

[NDN]

I could see them moving more Libertarian trying to provide a real option to the big government Democrats.

A lot of the GOP base are more left leaning on economic issues like healthcare or social security than the party leaders. So no, probably not.

[NDN]

More likely they will join the Libertarian Party methinks -I can't see any self-respecting libertarian Republican (think Philip) joining a party that they have long perceived as being more in favor of big government than the GOP. 

The libertarian party isn't going anywhere. If a moderate 3rd Party like Reform couldn't make gains they definitely won't because, sadly, they are mostly extremists. In the short term there will probably be a continued rise in Independents though... Probably from departing from both sides if the last 8 years are any indication.