Michael Rubin has an excellent piece in the Middle East Forum on Condi Rice's big mistake (well, at least one of them):

Rice's staffing reflected antipathy toward democratization. Her Policy Planning Director Stephen Krasner placed Suzanne Maloney, an Exxon Mobil official who had deferred an earlier employment offer because she preferred to work in a Kerry administration, in charge of the Iran portfolio. Maloney used her position to veto expenditure of much of the $75 million which the Congress allocated to support democracy in Iran. In an April 2007 interview against the backdrop of the Islamic Republic's seizure of 15 British hostages, her husband told an Iranian paper, "America also has to forget the hopeless policy of regime change, as well as the $75 million budget for the opponents of the Tehran government."[13] Rice also appointed Nicholas Burns her undersecretary of state for Policy, the same position promised him by the Kerry administration. After Robert B. Zoellick stepped down as deputy secretary of state on July 7, 2006, Rice sought to promote Burns, but the White House personal office vetoed his nomination.

Mr. Burn's exact role in policy is hidden by State Department secrecy, but it's visible in the Bush administration's letting the E.U.-3 (Britain, France, and Germany) take the lead in handling Iran's march toward the A-bomb. On Friday Mr. Burns was in London representing the administration in meetings with officials from Britain, France, Germany, and Russia to discuss Iran. Letting the E.U.-3 lead in dealing with Iran means policy is guided by the lowest common denominator of the three - Germany - whose policy is closely aligned to that of Russia, which is helping Iran build its nuclear program. Hardly surprising then that the E.U.-3's dealing with Iran are all carrots and no sticks. We sense Mr. Burns's hand as well in the Bush administration's acceptance of President Mubarak's election victory in Egypt - hardly a free or fair election. His influence is also seen in the Bush administration's close relationship with Saudi Arabia and the deference with which it treats Yasser Arafat's longtime sidekick, Mahmoud Abbas.
 

Mr. Burns has impeccable credentials for a Kerry administration official. He studied in France, earning the Certificat Pratique de Langue Francaise from the Sorbonne, and speaks French, Arabic, and Greek. He did a stint as spokesman for President Clinton's first-term secretary of state, Warren Christopher, where his service included criticizing Mayor Giuliani for kicking Yasser Arafat out of a concert at Lincoln Center, saying that Mr. Arafat deserved to be treated with "respect, dignity, and hospitality." Mr. Holbrooke's praises of Mr. Burns as being among a group of diplomats who are "centrists" and "non-ideological" are no doubt spot on. He's just not what the American people voted for, and when Mr. Bush returns from his gallivanting overseas the best thing he can do to redeem his commitment to voters is to do something about it.

Douglas Hanson adds:

I found Ed Lasky's blog on "Condi' mistakes" especially disturbing, but not surprising.  If personnel is policy, then the Bush administration has shot itself in the foot repeatedly.  For example, Meghan O'Sullivan (Sunni-Baathist defender) was amazingly appointed as the governance head in Baghdad for the Coalition Provisional Authority, and then was made Deputy National Security Advisor in charge of Iraq and Afghanistan - the defacto "war czar" prior to Lt. Gen. Lute's recent appointment.  President Bush has a CEO flair for getting his top managers and leaders to run the show without micromanaging their affairs, but for some reason, he wrongly assumes that these DC types will largely be on the same sheet of music.  When found to be directly opposing his policies in a time of war these same underlings mange to conduct business as usual without negative consequences.  Is this naïve or being dumb?  Whatever the reasons are, Condi seems to share this modus operandi with her boss.