There have always been two major wings to the Republican party.  I like to describe them using the Berlin Wall example.  When the Berlin Wall came down in 1989, George H.W. Bush was President.  I remember Bush's immediate reaction to the Wall's breech and destruction as an uneasiness because Bush was uncertain what would happen next.  Ronald Reagan, by contrast, expressed pure glee at the human freedom expressed by the Wall coming down. 

Ronald Reagan represented the conservative, populist wing of the party.  The wing that forged a coalition of blue collar and Southern Democrats.  This conservative wing is characterized by a belief in small government, low taxes, individual rights, national sovereignty and a strong defense.  They know what they believe, are comfortable with themselves and are instinctively populist.

The other wing is the more moderate wing.  This group, well represented by the Bush's, is more pragmatic.  They negotiate more frequently, compromise, believe that lower taxes and smaller government are better but don't ever quite articulate the "vision thing" as well as the conservative wing.  They are closely tied to big business and are instinctively cautious.

The clashes between these two wings are nothing new and I doubt that the split will ever result in a permanently divided party. 

Both wings have their advantages and have been regularly represented even within the same Presidential administrations.  Reagan had Bush as his Vice President, David Stockman as his budget director and James Baker as his Treasury Secretary - all moderates.  Caspar Weinberger, at Defense, and Ed Meese at Attorney General, are good examples of the conservative wing.

The same was true with George H.W. Bush and his son, George W. Bush's administrations. 

Victor Davis Hanson highlights things similar as they relate to Rush Limbaugh at NRO.

Update:  The Politico on The White House's plans for Rush.