I don't live in the U.S., so I am not up to date on all your internal politics. However, I don't see how you can buy the idea that Giuliani is sitting out the earlier states. For a nice summary, I suggest http://www.reason.com/blog/show/124231.html and the links within.

a small handful of small states get to make big choices for everyone

I've often heard that charge, but it's just not true. You said yourself Iowa doesn't have a good record of choosing the eventual nominee. And New Hampshire's once strong record of picking the eventual nominee isn't so good anymore. Both Bill Clinton (in 1992) and George W Bush (in 2000) lost their first NH primaries. Obviously, the rest of the country has a voice.

The fact is the process of choosing the nominees has to start somewhere. I think it should start in small states where retail politics is possible. (Of course, I live in New Hampshire, so maybe I'm biased.)

I agree with you on two points however. First, the media exaggerates the importance of any given contest. The Iowa results don't predict the eventual outcome, but what are you going to do about the media? Second, the process started way too soon this time around. I'm not sure what the solution is, but primary creep is a huge problem.

Also in some sense success in the earlier primaries allow for candidates without deep pockets to raise money for the long haul.

Yeah, it sucks being in states that no one cares about until the general election. OTOH, when that election rolls around no one cares about Iowa or New Hampshire so you might consider this an even trade. As things stand now Iowa and New Hampshire already have laws on the books stating that they are required to hold the first caucus/primary, but state laws really mean nothing here. This is an agreement among the leaders of the respective parties and since primary elections are private affairs of the parties the Supreme Court has nothing to say on the matter. Some states have tried to move their primaries up beyond the limits imposed by the parties and they are suffering the consequences of this by having their delegates ignored at the conventions.

Not being a resident of either New Hampshire or Iowa, I am sure you see it as some vast conspiracy, but the people in those states take their roles very seriously. They actually examine the issues and demand real face-time with candidates. Carpet-bombing the state with commercials and a mass-media driven strategy don't work (just ask Mitt) and I see this as a good thing. This enables candidates without a huge bankroll but with good political skills to actually have a chance. People often complain about the demographics of these states (because we all know they would not vote for a minority candidate, right :) but just about every state has some factor which makes it a poor representative for the rest of the country.

The irony in all of this is that the reason that Iowa and New Hampshire have been elevated to their current status is because so many other states tried to sneak up their primary dates and now momentum has a much larger impact that it once had. If there was a larger span of time between the first events and the later, larger ones candidates would have more opportunity to regroup or blunt an opponents momentum (which has happened in the past when the schedule was spread out.)

Since this election does not have an incumbent running for president, it is more than usually interesting. We could have had Bill Clinton run again (but this might prompt a challenge that would go to the Supreme Court), so instead we have Hillary. Unlike Bill, she has enough opponents in the Democratic Party that Barak Obama is a realistic candidate (despite his links to Louis Farakhan). Whoever gets the Democratic nomination will be president, so things will calm down (and resemble a coronation ceremony) once SUPER Super Tuesday is over.

You wrote: I'm already sick of the whole thing. This process has been going on for a year already, and we still have 10 months more to go.

That is not correct. This process has been going on for three years already.
[ Yes, I am sick of it too ]