ONE CONSEQUENCE of the Bush administration's recent decision to divide the Middle East between "extremists" and "moderates" was to marginalize U.S. diplomacy in the region. The administration refuses to talk to the "extremists" -- Iran, Syria, Hezbollah and Hamas -- but those governments and groups are at the center of every major conflict from Iraq to the Gaza Strip. Now one of the administration's "moderate" allies, Saudi Arabia, has stepped into the vacuum. The result has been a revealing demonstration of how talks with adversaries can sometimes be useful -- and a hint of what may be lost by Mr. Bush's inflexible policy....