That is a loaded question, but I'll offer a couple initial thoughts from my experience.
1. The Guard has huge political clout, so that will play a factor in any solution that is ultimately reached.
2. The Guard is designed to be an auxiliary war fighting force, so logically should be focused on units designed for fighting wars. I would not classify current operations in Iraq or Afghanistan as "wars" that meet that criteria. The guard should be more focused on the type of warfare that Gian Gentile advocates. Deterring in peace, but prepared to ramp up training, deploy and fight in time of war.
3. Training beyond basic individual and team levels is very difficult in the Guard. With the growth of simulators this is easier than it used to be. One can build incredibly effective teams in the Guard and individual skills. Tank crews, howitzer crews, FDCs, Forward observers, can become very adept. Collective operations at Platoon and above, as well as the command and staff synch are more difficult to hone pre-mob. Ironically, when large Active Duty training units are employed, as they were post Gulf War, it makes it worse. In large, they come in trapped in their paradigm of how to train active duty soldiers and units; and most have little empathy or creativity for this type of domestic FID work. They don't seek to establish rapport with the locals, they stay in little cliques, they are highly critical of the skills that they see as sub-standard based on their perspective, and often come armed with agendas from pissed off senior Army leadership (see item one above regarding the Guard's political clout). We can do better at training Guard units than we have in the past, and will need to.
4. What governors want though, are engineers, and ground and aerial transportation units. Not very sexy, but F-22s and M1A1 tanks aren't much help when a hurricane hits, or some hiker gets lost on Mount Hood. A smart TAG seeks balance. A couple high-end combat units and a couple of robust combat support units. This ensures a good stream of federal training funds, ammo, etc; as well as an ability to augment state emergency workers when disaster strikes.
The Guard is a great American institution. We are lucky to have it. Most don't appreciate that even long before 9/11, that leadership in "Enhanced Brigades" were routinely putting in 2 weekends a month and 3-4 weeks of Annual Training, in addition to another 4-6 nights driving 50 miles after work to attend training and planning meetings each month. Most AC soldiers find it too hard to be a soldier and a civilian and quit after a year or so; though to be fair, many quit because they are late comers to a club, and the two grades where marginal performers "stick" and serve for years in the Guard are E-6 and O-4. Getting stuck under one of these low-caliber Guard-lifers is understandably demoralizing.
Most of this is background from a guy who spent a great deal of time serving and leading on both sides of the fence. The RC has been rode hard by the GWOT since I went back to the active force, so I'm not sure how they stand now; and even that varies greatly by state.
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