I thought the same thing about staying in character. I lost interest too after a while at first. But I've started watching again (there's not much else on the Tivo during summer re-runs) and the show is much improved. Maybe there was a retooling of the writing staff or something. Maybe some viewers didn't get that it was parody, and now it's a little more over the top sometimes to remind you. If you missed the "tumbling" segment last week, you missed a classic.

I think kind of the opposite.  The first few shows were OK, but it was hard to see how he could keep it going, especially as the gag would surely wear.  I think the early reviews I saw (Slate, maybe?) observed that too.  But IMO it's just steadily gotten funnier.  Not noticed any of this "retooling," who knows, but several friends think it's even funnier than TDS now.  For me it's just different. 

I'm also more in awe of Colbert as a talent.  His ability is really amazing.  Besides the hilarious tumbling bit w/ Amy Sedaris, did you see the one where he debated Franken?  He really out-mastered a master! 

In spite of the known gag, now it's easy for me to see how Colbert can keep it fresh off the news indefinitely.  After all, "Papa Bear" and the rest of the rant shows are still going strong.