(FORTUNE Magazine) – The dusty West Texas village of Socorro--home to Democrats and Mexican Americans--should be enemy territory for a blue-blooded Republican like George W. Bush. But the Texas governor mixes easily with the crowd in the bunting-and-ballooned meeting hall of St. Peter and Paul Church. He doesn't just shake hands like a normal pol; he embraces everyone who'll let him, which on this day includes the six local mayors who invited him to visit. Indeed, the whole purpose of the afternoon fiesta is for these stalwart Democrats to turn Texas politics on its head by publicly endorsing the governor's reelection. Out of gratitude and respect, Bush delivers part of his speech in brisk Spanish. "Viva Bush!" shouts the audience of 500.

All of which is another reason to believe the prevailing wisdom of the political cognoscenti: 20 months before the New Hampshire primary, the 51-year-old governor is the prohibitive favorite for the Republican presidential nomination. He is George Bush in name, in appearance (he looks a lot like his dad), and potentially in organization (the old Bush network is eager to avenge his father's loss). Moreover, he is a formidable candidate in his own right: youthful, personable, experienced at governing, and exceedingly popular in the state that, after California and New York, delivers the largest number of electoral votes. "He's the 800-pound gorilla of the race," says Ed Gillespie, a former GOP staffer helping Congressman John Kasich in his nascent presidential bid. Gary Bauer, head of the socially conservative Family Research Council, and a possible contender himself, told CNBC: "The question is, Can anybody knock off George W. Bush?"

Not quite. The real question is, Can the son rise so soon after his father's fall? Put another way, Is George Walker Bush deft enough to take advantage of his famous name without confusing himself with George Herbert Walker Bush? Can he manage the delicate act of being George Bush while at the same time not being George Bush? And can he transfer his huge popularity in Texas onto the unforgiving national stage, a place where he has played only a supporting role in the past? Those questions represent the central drama--maybe the only drama--of the early race for the White House.

Before we get too far, it needs to be stated that Bush hasn't said he's running for President. In a rare interview with the national press, he told FORTUNE, "I know people don't believe me, but I haven't made up my mind whether I will or will not run, and I won't make it up for a while." His whole focus now, he insists, is getting reelected in November, which itself would be historic; no Texas governor has ever won back-to-back terms. And after that? His face turns stony before he replies. "This isn't a political decision with me. It's a personal decision, totally. The decision point is, Is it okay with my family?"--specifically his 16-year-old twin daughters. Then he adds, wryly, "I have a pretty interesting perspective on what it means to be the offspring of a President."

That said, Bush is leaving room to run and is quietly making moves only a serious candidate would consider. (See O Democracy! for what other contenders are up to.) He has surrounded himself with an able, experienced political team that could lead a national, as well as a statewide, campaign. His top aides are political consultant Karl Rove, chief of staff Joe Allbaugh, and communications director Karen Hughes. Behind the scenes, Bush has for months been reaching out to close friends, longtime associates, and family members to discuss how to handle a campaign. For his part, the former President is carefully analytical about what his son must do, according to people who have spoken with him. Dad believes George W. must first win reelection in Texas--and win big--in order to create momentum. He then needs to make sure he can raise the millions of dollars that any presidential campaign requires. Third, and most difficult, Bush says the governor must find a way to bridge the chasm between the party's moderates and the Christian Right.

The easiest of these hurdles is reelection. Polls show the governor more than 50 points ahead of his Democratic rival, land commissioner Garry Mauro. But Bush watched his father's popularity plummet from more than 90% during the Persian Gulf war to below 40% by Election Day nine months later, so he's taking nothing for granted. In the 24 hours that began the day of the Socorro fiesta, he gave two press conferences and three commencement addresses, at which he shook at least 3,000 hands. Bush demands that none of his backers say he's interested in anything other than winning the Texas election. One paranoid operative contacted by FORTUNE called back to say, off-the-record, that he wouldn't even talk off-the-record about Bush's presidential aspirations.

As for cash, no worries. Texas, one of the nation's richest fundraising states, would produce a mother lode for her favorite son. Florida, another major source of election lucre, would deliver largely to Bush if, as expected, George W.'s brother Jeb is elected governor there in November. George W. has also made a major play for California, fundraising's golden state. He has traveled there several times to raise money for the California GOP and its gubernatorial candidate, Dan Lungren. If Bush locks up the bulk of GOP money in Texas, Florida, and California, no one will beat him in the money chase. (Steve Forbes might be able to spend more, but most of it would be his own money.) In addition, remnants of President Bush's money machine are poised to collect whatever else George W. needs. Republican insiders tell FORTUNE that the Bush finance team is almost sure to be headed by two of the party's most daunting fundraisers, Brad Freeman, an investment banker in Los Angeles, and Heinz Prechter of Detroit, who made his first fortune mass-producing auto sunroofs. (In true Bush fashion, neither man confirms this.)

The third challenge, appeasing Christian conservatives, won't be as hard for the son as it was for the father. Unlike his dad, George W. is comfortable speaking about God and the importance of spirituality and family in the context of government. "Government can hand out money, but it can't put faith in your heart or hope in your lives," he says. Bush may have a secret weapon in former Christian Coalition executive director Ralph Reed. Now a freelance consultant, the baby-faced Reed has an arrangement with the Texas Republican Party that enables him to travel to Austin once or twice a month and sit down with the governor. Reed, who is certain to be the most sought-after Republican operative in the presidential contest, would be the ideal liaison to social conservatives for a centrist like Bush.

Another top political adviser hanging close to the Bush fold is Dave Carney, a veteran of many New Hampshire primaries. Interestingly, he is assisting the one person who could free Gov. Bush to pursue national office: Texas agriculture commissioner Rick Perry, the Republican candidate for lieutenant governor. (Like many states, Texas selects its governor and lieutenant governor separately.) Perry's victory would make Carney a strong bet to join the Bush team.

George W. says one of the most important lessons he learned as a senior campaign aide to his father is that "issues matter a lot." Despite his early reputation as a policy lightweight, George W. has developed a new brand of Republicanism--what he calls "compassionate conservatism"--that blends Clintonesque pragmatism on fiscal matters with tough-love conservatism on social issues. Like traditional Republicans, Bush has worked to limit government and lower taxes, especially for small businesses. In 1997 he signed the biggest tax cut in Texas history--$1 billion in property-tax relief over two years.

But unlike most Republicans, he is willing to say aloud that he seeks to make government work better and actually wants to spend more on selected programs, particularly education. Thanks to intensive remedial training, which he got the state to finance, Texas has markedly improved the reading and math skills of elementary students. Bush also began one of the nation's most ambitious charter-school programs. (Charter schools are public, but are controlled by parents and others independent of the local school board.)

He is pro-life on abortion except in cases of incest and rape, or when the mother's life is in danger. He's no friend to trial lawyers, and he is tough on criminals, including juvenile offenders--all fairly mainstream Republican views. At the same time, he doesn't buy the anti-immigrant orthodoxy of many in his party. Instead, he's determined to expand the GOP's appeal, especially among Hispanics, who not coincidentally will constitute a majority of the population in Texas and California by 2020. "I want to show people a way that a Republican can get Hispanic votes," he says. "It's very important to be successful, especially among groups of people that may feel disaffected from the...party."

Not many who knew Bush a decade ago would have guessed he would turn out this way. As his father's eyes and ears during the 1988 campaign, George W.'s job was to enforce loyalty, which he did brusquely and with vivid language. Behind his back, he became known as "Junior," a nickname he despised, and not only because it was inaccurate. George W.'s political skills also were open to question; he had lost his only bid for public office in 1978, when he was defeated for Congress.

The rap on Bush was that he was spoiled. The grandson of a senator (Connecticut's Prescott Bush); the son of a President; a graduate of Andover, Yale, and Harvard Business School--what could he possibly want that he didn't have? Even he admits his young adulthood was profligate. He was cocky, undirected, and keen on driving fast cars. When he finally began to make his way in business, some scoffed that his name had more to do with his success than his talent or diligence. He made money as an oil executive, like his father, and as an owner and top executive of the Texas Rangers baseball team.

Along the way, he changed--and won over his doubters. Although Bush can still be petulant, smug, and domineering, he is also attentive, substantive, and, by all accounts, a complete charmer. Lots of credit for this transformation goes to his wife, Laura Welch, a former librarian and teacher from Midland, Texas. She is the calm amid her husband's storm of energy and willfulness. And he is genuinely agog over his daughters, named Jenna and Barbara after his wife's mother and his own. The disappointment of his father's defeat in 1992 helped stiffen his resolve and sharpen his drive. In 1994 he won a come-from-behind victory for governor against the feisty and popular Ann Richards. She made the mistake of deriding him as "Shrub"--too harsh a term for a man whose wit and sensitivity Texas voters had come to appreciate.

The challenge for Bush will be to introduce the rest of the country to the man he's become. To do so, he may need to replay his adolescent rebellion against his parents--particularly his father. He seems eager to do so. Asked what Dad thinks about his son's possibly running for President, Bush draws up short and says, "What about him?" And adds sharply, "This is my life." When he discusses his days as a campaign aide, he says, "I was the loyal son." Then he emphasizes, "I'm the guy now!"

Of course, he is still the son. And he isn't so callous or politically foolhardy as to ignore that. In our interview, he speaks about his love for his father and the loss to the country that he believes the elder Bush's defeat represented. In public, he is mostly a mama's boy. He refers often and without elaboration to "Mother," thus allowing audiences to remember Barbara Bush fondly on their own. It's an effective technique: Six years after her husband left office, Mrs. Bush is still much loved.

How will Bush do when it's not just the eyes of Texas upon him? Under the glare of national scrutiny, he almost surely won't shine as brightly as he does at home. He stumbled last year when he appeared with a group of presidential wannabes in Indianapolis and gave a mediocre speech. And questions are sure to be asked about his military service: During the Vietnam war, Bush stayed in Texas as part of the Air National Guard. Also, one of his budget plans was controversial among conservatives because it included a tax increase--something a Bush must be leery of.

Those who have seen the governor up close lately give him above-average marks for big-audience addresses. His commencement speeches were funny, self-deprecating, and mercifully short. On the stump he's certainly looser and more accessible than Al Gore. And unlike his father, he almost always speaks in complete sentences, often in logical and rapid-fire sequence. He has Clinton's knack of seeming completely absorbed in whatever conversation he's having. At times he stands stoop-shouldered and nervously shifts from foot to foot. But if Clinton could adopt a more presidential posture, surely Bush can as well.

Other essential traits, which have to be inborn, the governor already possesses. He has a gigantic physical vitality. He runs three to six miles a day when he can. His pace is so fast (seven minutes a mile) that his security detail doesn't attempt to keep up; they bike. No introvert, he relishes meeting people, and actually becomes invigorated by the endless public exposure that running for office demands. He can co-opt people disposed to dislike him--at least in his home state. Lt. Gov. Bob Bullock, a Democrat, has endorsed his reelection. Lots of key Republicans like him as well. "He's an incredibly attractive person; he would make a great President," says Sen. John McCain of Arizona, often mentioned as a potential Republican candidate himself.

Although the snows of Iowa and New Hampshire are a long way from the heat of Socorro, the betting is that the yellow rose of Texas will blossom there too.