I don't think a Party that has held the Governorship of a state for the past 16 years should be considered completely "dead" just yet. This is not to say that we don't have, and haven't had a huge problem in the state for a number of years.
Massachusetts has a long Democratic tradition and that will always be hard to break. It is especially hard in a polarized national political environment.
That being said, 36% of the people cast their ballots for George W. Bush against a native son. That's better than Kerry did in at least the top 7 states for Bush. There are constituencies that are willing to vote Republican and those could and should be turned into down-ballot victories first before worrying about a hopeless U.S. Senate race.
It may seem impractical to worry about state house seats in a legislature that is so overwhelmingly Democratic, but it never hurts to have a farm team that could eventually produce at least one Congressional seat from the state.
I think the MAGOP might consider something radical - not a complete separation from the national GOP - but a "distancing", development of a comprehensive state-oriented platform, recruitment of non-traditional candidates on a broad scale, and perhaps even a name change of some sort. If the Democrats in MN can be officially called "DFL" (and in ND they're called D-NPL), why can't the MAGOP be called "The Massachusetts Party" or something like that. Its a bit Canadian, but I think it might work