Pawlenty's potential was illustrated in February by Nate Silver. His graphical representation of the GOP field at the time shows where candidates fell on two of the most important variables for this year's primary electorate, establishment vs. insurgent and moderate vs. conservative. At that time Pawlenty occupied kind of a sweet spot. Not too hot, not too cold, but just right.
He updated this chart post-Iowa straw poll and with the announced candidacy of Rick Perry (represented by the large dotted line circle). It shows Pawlenty still well positioned, but with Perry as a more conservative and less establishment oriented candidate.
I think the jury's still out as to whether the electorate will ultimately consider Perry to be either more conservative or less establishment than Tim Pawlenty. Widespread coverage of his past flirtations with government mandates and enabling illegal immigration, not to mention supporting Al Gore, could certainly move his impression upward and to the left on this chart. If that's the case, he shifts towards Romney territory. And if those two are fighting for the more moderate and establishment wing of the GOP primary electorate. Left up for grabs is the large, and perhaps decisive, vote of the tea party wing. Assuming a broad coalition will never form for Bachmann, Paul, or Cain, Tim Pawlenty could have been in prime position to pick that up, especially in Iowa, if here were still in the race.