But some people have put it in context, so now it seems like a victory:
1. Most of the GOP base is pissed. Head over to free republic or any other conservative sites and you'll find people complaining about how the GOP leadership has sold them down the river like a pack of cigarettes (This one is nothing short of priceless). Dobson even went out of his way to call out the Republicans and call it a betrayal. At best, it means that the base will be alienated a bit, hopefully decreasing their leverage over mainstream politics.
At worst, it means that Frist will be marginalized after failing to live up to his promise to win the nuclear option battle, preventing his ability to get the nod for the 2008 presidential election. He's already admitted that this has been somewhat of a defeat, especially since he's been trying to phrase the nuclear option as the only constitutional solution to this mess, but he's also trying to play up the three nominees as a partial success. Maybe McCain can use this as a jumping off point to another run... wouldn't be too bad of a direction for the GOP to move in, even though he's kind of old and that would probably never happen.
2. The Dems probably didn't have the votes to stave off the nuclear option. That means that if there had been no compromise, we would have lost and all of Bush's nominees would get rubber stamped. Sure, we're probably going to see three of them on the bench, but that at least creates the possibility that they won't all be there. At the very least, it's good for the long term health of the Senate and the ability of minority parties to place checks on majorities that the nuclear option wasn't invoked.
3. The Dems are saving up for a much more important battle: Rehnquist's replacement. The filibuster should be available for that much more consequential battle, as well as the decision over who's going to be chief justice. Odds are that it would happen closer to the election, which would make invoking the nuclear option more difficult. I would much prefer that we get a good compromise on that justice rather than a situation where Bush can appoint whoever he wants, which is frankly terrifying.
So, not too bad. "Extraordinary circumstances" is kind of questionable since I neither know what that is nor in what circumstances it can be invoked without the Republicans claiming that the Democrats aren't living up to the compromise in good faith, but it turned out a lot better than it could have.
Edit: After reading the text of the compromise and seeing that "extraordinary circumstances" is up to individual discretion and that the nuclear option has been voluntarily ceded this session, I'm feeling pretty good.
A. Future Nominations. Signatories will exercise their responsibilities under the Advice and Consent Clause of the United States Constitution in good faith. Nominees should only be filibustered under extraordinary circumstances, and each signatory must use his or her own discretion and judgment in determining whether such circumstances exist.
B. Rules Changes. In light of the spirit and continuing commitments made in this agreement, we commit to oppose the rules changes in the 109th Congress, which we understand to be any amendment to or interpretation of the Rules of the Senate that would force a vote on a judicial nomination by means other than unanimous consent or Rule XXII.
We believe that, under Article II, Section 2, of the United States Constitution, the word “Advice” speaks to consultation between the Senate and the President with regard to the use of the President’s power to make nominations. We encourage the Executive branch of government to consult with members of the Senate, both Democratic and Republican, prior to submitting a judicial nomination to the Senate for consideration.