Although he is vulnerable, I think Dayton will likely edge out a close victory in Minnesota unless his opponent is Mark Kennedy. If Kennedy runs, Dayton will probably lose. Ive heard from others that Kennedy is very popular in Minnesota and will be the toughest opponent for Dayton.
I don't know who told you that, but it's hardly true. Kennedy hasn't even broken 60% in his own congressional district, he's hardly very popular statewide. In fact, I'd consider him the weakest candidate out of Minnesota's 4 GOP Congressmen. The strongest would be Jim Ramstad, but he almost certainly will not run.
And if Coleman wants to run for president on a record of a 1 term Senator who hasn't done anything and just is a complete party hack, he can go ahead. But he will be very beatable in 2008 if he runs agin.