I'm guessing many prominent Democrats excepted Bush Sr. to easily win in both 1988 (which he did) and 1992 (which he didn't) and thus they decided against running what they thought would be a futile race.
No, actually; Many Democrats saw 1988 as leaning in their favor, for reasons probably known to you (Iran-Contra, National Debt, etc.), but all of their good potential candidates, Biden, Cuomo, Hart, all had either shot themselves in the foot or decided not to run. 1988 was probably going to go the Republican anyway with either of those candidates, but many expected the Democrats to win.
I agree with you about the factors that favored the Democrats in 1988, but you forgot to mention two very important factors that favored Bush Sr. that year: the good economy (unemployment that year was between 5 and 6% pretty low/average levels) and the fact that the U.S. was not involved in any foreign wars. These two factors greatly helped Bush Sr. overtake Dukakis's lead throughout the fall, when many people began to pay more attention to the election (and the economy and foreign affairs). I know Dukakis's mistakes greatly hurt his campaign, but I think that Bush Sr. would have had a very large boost in his support and popularity throguhout the fall (possibly enough to win the election) regardless of who his opnent would have been.
