The fragmentation is within the Democratic Party and "dueling progressive agendas" and in the Republican Party between civil libertarianism and establishment conservatism.
I essentially agree about the basis of the Democratic split, but I think the Republican split I far more damaging to their overall chances.
The Republican split is at least a three way between establishments (Bush), libertarians (Paul), and religious conservatives (Huckabee, Santorum, etc).
I would argue that at this point the Republicans are in a real bind, a Catch-22. Candidates can't win the nomination or the general election without the evangelicals stepping up and voting, but they're doomed with independents if they appear too evangelical themselves.
The Republicans have allowed this far right element of the party to wield too much influence for too long, and now it's biting them on the a$$.
Even though I'm a Democrat, I hope they figure it out and find a way to be nationally competitive. I don't want there to be one party rule for the next few decades. Competition is good for political parties, it helps minimize corruption. California is a one party state, and look where it got us.