So first, I'll give you my impression of why Bernie would've also been a mistake. If you disagree, fine, this is all hypotheticals, but here's why anyway.
Yes, Bernie would've engaged the millenials, and possibly even brought some of the older rural whites on board with his anti-trade policies. Let's flip WI and MI to Dems with him at the top of the ticket. However, the flip side is that you would lose minorities. Minorities chose Hillary Clinton over Bernie Sanders, and you can't expect them to just fall in line for the general if Sanders got the nomination, just like how Hillary shouldn't have expected the milennials and rural whites that Bernie energized to fall in line. Especially because giving Bernie the nomination would suppress their votes, since they were most of the reason Hillary got 3 Million more votes than Bernie in the primaries. So in this scenario, PA stays red, Florida is even further red, and the Dems almost definitely lose VA. So it's still a losing ticket. Plus, for these older rural whites, socialism is still a poisonous term. That probably would sink him alone, but then you add in his skeletons that didn't really get brought up (Sierra Blanca, his wife's university), the fact that while his tax plan would be a net benefit with free healthcare, it would've raised the middle class's taxes, and that Trump could hit him with the same "he's been in Washington for 30 years, why didn't you fix it yet?", and I don't see how he wins.
As for the bolded, I think you're missing the point. Hillary-GAF, and I think even a lot of the DNC, wants these people gone too. Stick Keith Ellison in the DNC chair (assuming he gives up his seat, we need a full-time chair). We want the people gone that are refusing to self-reflect and realize why this was lost. But that doesn't mean everyone. Harry Reid doesn't need to disappear. Howard Dean shouldn't be instantly opposed, especially given his previous success. Donna Brazile? The Clintons themselves? Sure, throw them out, they're done. But we don't need to get rid of all of the establishment. There are plenty of them that would be a huge benefit going forward, and we shouldn't push them out on principle.
Oh of course. Hillary was a mistake as a candidate, but I think she's a fantastic person. Her policies were great and I think even with a Republican Congress she would've gotten shit done and really push the progressive movement forward. But in order to do that she needed to get in, and her bad candidacy prevented that.
