Kerry can still win only if he gets a majority in the Electoral College – an unlikely but not totally impossible event. The counting of provisional and absentee votes in Ohio, for example, could give him that state’s electoral votes and the presidency. Granted, the circumstances that would result in that happening are rather far fetched. (I believe it was reported that he’d have to score something like 80% of the provisional votes.)
What happened Tuesday is that 272 Republicans and 268 Democrats were chosen to together select the next President. (If my numbers are off, kindly correct them, someone.) In the absence of either man dying or going into a terminal coma or something else bizarre, those 272 Republicans will vote for Mr. Bush for President and Mr. Cheney for Vice-President, these results will be read by Mr. Cheney in his capacity as President of the Senate on January 6, 2005, and the two of them will be re-elected.
If Mr. Bush or Mr. Cheney should die or some other reason supervene for not re-electing them (Cheney is discovered on 11/17/04 to have paid Osama Bin Laden to conduct 9/11 in order to get Haliburton more money, to give an ultra-bizarre example), then the 272 Republican electors will (probably) choose the remaining candidate for President and vote freely for a Vice President, presumably consulting with Republican National HQ and among themselves so that they produce a majority for the desired individual.
If the Electoral College does not give a majority to anyone, then the House of Representatives chooses the next President, with one vote to each of the state delegations, 26 needed to win. The Senate likewise chooses the next Vice President.
If Bush died, his electors would not vote for Kerry, but rather (probably) for Cheney.
Your confusion lies in two different things:
Mr. Bush’s first term ends on January 20. If Mr. Cheney were to succeed him now, he would be President until January 20, as Vice President serving out the (almost completed) term of the President.
Mr. Bush and Mr. Cheney were also the winning candidates for President for the next term – the one that begins January 20 and ends on the same date in 2009. When people say that Mr. Cheney would only serve until January 20 if Mr. Bush died, they are talking about the current term. Presumably Mr. Cheney would receive the votes of the 272 Republican electors and be inaugurated as President for the new term.
If Mr. Bush is chosen by the Electors and then dies, Mr. Cheney would definitely become President, not merely for the remainder of the current term, but for the new term, under the provisions of Amendment XX, Section 3, first sentence: “If, at the time fixed for the beginning of the term of the President, the President elect shall have died, the Vice President elect shall become President.”