The talk shows are up in arms, the Democrats are furious, and even Daily Kos is predicting a Democratic loss in 08 over it. The California Democrats are pushing last centuries reforms with their National Popular Vote, and now the Republicans want a referendum on delegating electoral college through congressional district. So it looks like California voters will get to chose which method they prefer.
By far the most democratic way of delegating electoral votes would be statewide through proportional representation. I have a feeling neither Democrats nor Republicans will be pushing that reform anytime soon.
The next best option would electoral college by congressional district such as is being put forward by Republicans in California. This approach would make the electoral college much closer to a national popular vote. The Democrats in North Carolina were pushing an identical bill last month, and Colorado has entertained similar measures. California may be just what these states and states like Virginia and Pennsylvania need to get the ball rolling.