Like it or not, among Republicans and Independents of the moderate to conservative bent, Michael Moore is now the symbol of your party more than any actual party leader...and mainstream Dems made that possible by refusing to repudiate Moore and his vile lies.
I'm not really sure if repudiating Moore would help. I've repudiated liberals who are on the extreme end of things many times and tons of conservatives still claim that they represent every liberal in existence every single time they open their mouth. I don't really know what else I can do.
That said, I do personally feel that the Democratic Party needs to shift itself in from the left. Nominating someone like Bill Richardson instead of Dennis Kucinich would be a good start. Whether we like it or not, those in the left wing of the Democratic Party probably believe a lot of things that the large majority of Americans don't and probably won't help the Democratic Party's image if nominated as our candidate for president.
We shouldn't just be "GOP Lite", though. It's possible to be a moderate Democrat and still definitely be a Democrat. I personally think the main thing we need to do is shake our image of being a directionless party that attracts tons of extreme leftists from the lunatic fringe and do our best to establish what we really stand for, which is probably something that Americans can be much more agreeable towards than what they currently think we stand for.
That said, however, if we do nominate someone like Dennis Kucinich, I'm not going anywhere. I don't identify with the Democratic Party to win elections; I do so because I agree with its platform more than any other party's.