Forgive me for this lame attempt at a TL. I'm still a rookie and hope to get better in time.
In RL, Bush had a 50% approval rating and support for the war was also about 50/50. Suppose that Bush makes the decision not to go through with the invasion.
I don't think he loses much support among conservatives, liberals still would hate him but his support among independents remains pretty strong. He holds an approval rating in the upper 50s on election day and handily wins against any DEM. He does 3% better across the board, which is enough to flip WI, PA and NH.
Bush 321- Kerry 217
Bush's 2nd term is still tough. He loses support after Katrina and his push for immigration reform. By the end of his 2nd term, his approval is down to the mid 40s. DEMS take the House in '06 and the Senate in '08.
2008 election:
GOP: Bruising primary with Romney, Huck, Thompson, McCain. Without the surge, McCain does not win the nomination. Huck comes out on top but fails to unite the party and chooses T-Paw as his VP
DEMS: With no Iraq, Hillary wins all the way but Obama still does well in the primaries and is chosen for VP.
Very polarizing urban/rural divide. With Bush less unpopular, the GOP is more competitive. In a close election in which several states are decided by a razor thin 1% margins, Clinton pulls out a narrow win.
Clinton/Obama 271 Huckabee/Pawlenty 267
