No, I don't believe that.
What I'm saying is that it would be better for conservatism if moderates like Powell and Snow, as well as rank and file members who aren't on the far right fringe, were to leave the party to the birthers and Palinistas and let it wither on the vine.
Suppose you did have pragmatic Republicans forming a Conservative Party, along with some Democratic defectors who don't care for that party's left wing, and a few independents and maybe some 3rd party folks who have only been where they are by default.
With the right platform, it could be the new home for reasonable conservatives who see where the GOP seems to be headed and don't like it, along with Reagan Democrats, McCain swing voters, etc.
Given a rational pro-business policy, a willingness to compromise to get things done (no insistence on ideological purity), more openness toward minorities, a distaste for obstructionism, a balance of social conservatism with personal freedom, an inclusive stance on religion, a tempered fiscal conservatism rather than a mere tax-cut mantra, a realistic environmental policy, a firm stance on illegal immigration that doesn't lapse into race baiting, and an explicit disavowal of conspiracy theories and paranoia, at this moment such a party could do very well.