I recently wrote a blog post about people in this situation.

I learned long ago that employees are never powerless in the face of tyrants.  My mom taught me that - accidently.
You can read more about how you as an employee can still ruin and resist 0r support success.
http://themiracleworker.wordpress.com/2010/05/13/im-in-control
The point, employees have choices besides leave or bow down.