Powell crushes Gore in the general election by a good margin.
With Powell in the Oval Office, we probably don't see 9/11 happen. Powell is probably a lot more serious with al Qaeda than Bush was in the months before it happened, and as a result, the World Trade Center is probably still around in 2010.
The economy will be Powell's biggest concern, and it will probably dominate the discussion in Washington as the early aughts recession continues. Powell probably remains politically popular, but the Congressional Republicans don't, and as a result, the Democrats take back control of the Congress in the 2002 midterm elections.
Powell's Presidency is relatively calm on the foreign policy front, with a few jabs here or there with missiles into Iraq. Iran and North Korea don't start up nuclear weapons programs, and things are generally a lot calmer after U.S. Special Forces kill Osama bin Laden in Afghanistan in late 2001.
The 2004 Presidential Election still focuses on the economy, but Powell's larger than life image insulates him from any truly strong Democratic challengers. Nevertheless, a number of Democrats do come forward to challenge Powell, and the nomination ends up going to former Vice President Gore, who has decided to challenge Powell for a second time largely because of the vacuum of viable Democratic candidates. Powell beats Gore by a larger margin than he did four years earlier, though the Democrats maintain control of Congress.
The second term of the Powell administration is much less easy going than his first, with the economy worsening as a housing bubble bursts. Powell's popularity declines to the low forties for the first time in 2006, and a second drubbing by the Democrats gives them a larger control over Congress, with a noisy progressive caucus taking the lead in pushing Democratic legislation to the disdain of House Speaker Gephardt, who wishes to maintain a good working relationship with the President. The last two years of the Powell administration focus on the bailing out of failing financial institutions, infuriating Democrats and conservative members of his own party.
The Republican Nomination of 2008 is a hard fought battle in the backdrop of all of this. Vice President George Voinovich, a self-described 'Powell Republican' decides not to seek the Presidency owing to his age (72 in 2008), and instead endorses another 'Powell Republican', Governor Mitt Romney of Massachusetts. Opposing Romney and the moderates is conservative George W. Bush, the Governor of Texas and fellow Powell opponent for the Presidential Election of 2000. Conservatives are truly unhappy with both candidates, with Bush's own waffling to gain the support of moderates, but nevertheless, Romney is able to eek out a win with the influx of more moderate 'Powell Republicans' into the party.
On the Democratic side, former First Lady and now Senator Hillary Clinton finds herself dethroned for the Democratic nomination by populist liberal Howard Dean, who nearly defeated Gore for the nomination in 2004 and masterminded the Democrats' 2006 midterm sweep. Dean chose as his running mate Washington Governor Chris Gregoire, and promised a liberal agenda for the United States in the coming years.
The Democratic ticket wins by a comfortable margin and Dean is inaugurated in 2009 with a Democratic supermajority in both houses of Congress.
I have to say, I would love to see a full TL based around this scenario. While I'm a Democrat, Colin Powell is the Republican that I respect the most in the USA today. In addition; I was an early Dean supporter; I was actually in the room at the infamous "Dean Scream" (btw, he wasn't screaming