I once thought Hagel had a very good shot at winning the Republican Presidential nomination in 2008. He's an old-school conservative: favors tax cuts but not at all costs, believes in measured foreign policy intervention, thinks the govt should butt out of people's private lives, etc. etc. I thought that Hagel could be what it now looks like McCain is going to be: the anti George Bush, back to the roots of the party Republican candidate. [No surprise that McCain crowds Hagel out - they're both veterans with an 'outsider' tag].
I still think Hagel has an outside shot, mostly if something happens to McCain (eg. something that makes his age an issue - like a disease or heart attack). But he has been so critical of his own party that he's alienated many. It will be interesting to see if he does run, and whether he tempers that criticism or tries to capitalize on it.