First things first, the leadership election in question was in '94. Second things second, Labour would win in '97 with or without Clause Four. They may not win as big (Although personally, I think Clause Four was close to being irrelevant; the wider actions of the leader and their personality, and policy direction were probably more important) but they would still win.
Brown would try to reform Clause Four, but you have to hold out the possiblity that he would not be succesful. He was not popular at the time of Smith's death, as he'd spent the last two years trying to abandon Labour's '92 commitments. He's a poor politician generally, and he's especially bad at persuasion. But I think he would nose it through, particularly if Prescott is deputy. But he may get Beckett, in which case, all bets are off. Brown would stick to more of the '92 commitments than Blair, but he would be cagey about it.
Most PMs angle to pack Cabinet with their supporters or competent (or not so competent) nonentities, but Brown has fetishised this. Big names in a Brown cabinet would be Andrew Smith, Alastair Darling, Nick Brown, and, depending on what happens in the leadership election, Peter Mandelson. Rivals like Blair (Assuming he yet liveth in this scenario) and Cook would be shunted off into dead-end departments at the earliest available opportunity. Without Blair's communication skills, drive, and abilities in managing people, there's every chance that Brown may arse things up pretty quickly - if not in the first term, very likely in the second.
If Brown doesn't win as strongly as Blair did, and IMO he is very likely not to, then Michael Portillo would be Tory leader; with Brown drifting and under fire from within his party, the Tories would probably be back in in 2005/6 under him or his successor.