Alright. So, as a card carrying member of the Libertarian Party, here's my plan and advice for 2012.
Keep in mind I live in a closed primary state. I cannot caucus as a Republican unless I officially change my party affiliation before the caucus, which I might actually do.
The Libertarian party should nominate Ron Paul. Why nominate a traitor, you ask?
Well, there's a few reasons. First, the matter of principles. Although Ron Paul may have left the Libertarian Party, he still holds firm in many Libertarian beliefs. Best example? Ron Paul has been an outspoken opponent of the U.S.'s Middle Eastern wars since 2001.
There is nothing in either law or the LP bylaws which states that candidate must actually be a party member in order to be nominated on the Libertarian ticket.
Second of all, practicality.
Best case scenario for Libertarians (and small "l" libertarians as well) is Ron Paul actually wins the Republican nomination. A candidate can appear on the ballot with multiple nominations. If this happens, one of two things happens, depending on each individual state's election laws. Either the candidate appears twice on the ballot, with each party's name, or the candidate appears once with both parties.
Scenario a) the candidate still gets the votes from both names. We could actually have a Liberty minded president in 2013. More importantly, the LP could leverage these states to show how popular Libertarian ideas actually are. Although Ron Paul, Libertarian, would appear below Ron Paul, Republican, on the ballot, both votes count the same (for who wins the office). On the other hand, the total per party is calculated separately. In this case, the Libertarians could appeal to Republican voters to choose the Libertarian Ron Paul if they hold Libertarian values. Without the risk of them "wasting votes" or "stealing votes" from Obama's opponent, they could still vote for the same candidate but express their true, Liberty-minded, political opinion at the same time. Since Ron Paul's own campaign, and the Republican Party, would likely be paying most of his campaign expenses, Republicans could focus on these states and voter education to encourage voters to vote for Ron Paul, Libertarian.
In Scenario b), the candidate only appears once. Sharing a nominee with a major party would mean a lot of "Libertarian" votes. Which could potentially help with ballot access issues, as well as raise general awareness. Just seeing the name of our party next to one of the two real contenders in a presidential election will arouse a lot of curiosity.
Now, the other possibility is that Ron Paul loses the Republican nomination and wins the Libertarian nomination. Should Paul have a strong showing in the Republican primaries, but not win, he might choose to actively campaign as an independent, or, more to the point, Third Party, candidate. With the huge amount of fundraising he is sure to do leading up to the primaries, this could provide the LP with significant sources of campaign funding. Moreover, as shown by the whole Ron Paul rEVOLUTION thing, he has many, many, very devoted followers. Although most will surely vote for the "lesser of two evils," some are actually Democrats or Independents, and some are hardcore liberty-minded Republicans, all of who might very well choose to support Ron Paul over the Republican nominee. It is doubtful this would be enough votes to win the election. But it might very well be enough to get the Libertarian Party some attention, and, more importantly, to have the "largest third party in America," be viewed as a viable political force and option.