I can't say whether, as Politico's Roger Simon reports, an order has gone out from on high for the Clinton camp to lower expectations in Iowa. But I can say that my experience in Iowa last week basically jibes with Roger's. Clinton people with whom I spoke there talked the Edwards operation through the roof. Interestingly I heard less expectation-setting about Obama, though. And in fact a key point I took away was that, although both Clinton and Obama are relying far more than Edwards on first-time caucus goers who may or may not show up January 3, the Clinton folks believe their first-timers more generally fit the profile of people who actually will turn out. (Obama, for instance, relies much more heavily on young voters--and almost no one prevails in American politics by banking on the youth vote.)
For what it's worth, I'm increasingly betting on an inconclusive muddle in Iowa. One that simply vaults the whole high-stakes Democratic contest to New Hampshire in a more-or-less status quo condition. Obviously if someone dramatically underperforms they'll be in deep trouble. But it seems probable the Iowa results will simply be too tight to settle anything. Will Hillary really be destroyed, for instance, if she finishes two points out of first behind Obama? Or vice versa? (I concede that Edwards is in the most perilous position, likely unable to survive without at least a close second. Even finishing third in a 29-28-27 result would be pretty deadly.)
Of course, if the Iowa numbers are unsatisfyingly close, the media may nevertheless insist on declaring a winner. In that case maybe the most interesting story of all will be the campaigns' furious spinning and browbeating of the reporters who will craft the Big Narrative, and the way that narrative emerges..