You're right that Minnesota has been gradually trending to the right. The trends most noticeable are the following: Older voters are the most heavily Democratic (Humphrey and Mondale people) and are reaching the end of their lives; the Iron Range in Northeast MN is heavily Democrat but casts a much smaller percentage of the statewide vote than 20 years ago; the Minneapolis suburbs are spreading out far from the city center and are heavily Republican; and rural areas, once fairly receptive to Democrats, are becoming more conservative.
The other factor is that the state's Democrat party (called Democrat Farmer Labor) is pretty much controlled by urban liberals and are increasingly out of step with the rest of the state. IMO Bush has a very good chance of carrying the state in 2004. He needs to blunt the Democrat trend in the older suburbs though. (As a side note, a poll 3 weeks before the 2000 election showed Bush with a 1 pt. lead. This forced Gore to spend funds here to hold the state, which cost him resources elsewhere)
So is Minessota not really much of a "rust-belt" Great-Lakes state with a heavy labor presence that Gephardt could take advantage of?