While the Iraqi military, with some help from Iran and the U.S., may be able to hold on to what is left within its purview, it's hard to see it reclaiming much territory without major foreign interventions. Which could easily backfire, both for Tehran and Washington, the only capitals which might be involved.
The question this raises for the GOP, and whoever they nominate in 2016, is whether they are smart enough to run a campaign that focuses on Clinton's record, accomplishment, missteps and the like, rather than her gender and increasingly less polarizing personality. This would be hard for a party that has generally proved itself unable to avoid that temptation.
A Clinton-Bush election would be competitive, but would end in a victory for the political establishment. Whoever won that election would be well-prepared to govern and extremely familiar with Washington, the presidency and partisan politics, but bereft of any innovative approaches or comprehensive critiques of the political system.