Saying Yes to a New Job

This morning I had an interview for a position in Illinois. The job would be a definite step up from my current position - in both responsibility and pay. My interviewer showered me with compliments about my winning personality and how much she was sure she would enjoy working with me. Near the end of the interview she informed me that there were also internal applicants for the position and inquired whether I would be interested in a lower-level position (obviously one currently filled by an internal applicant) should the original one be filled internally. I told her yes.

Now, of course, I am having second thoughts. It seems clear that the internal applicant will most likely get the job. While the lower level job would hold challenges of its own and still pay more than my current position, it would be a lateral move. I am hesitant to take it. When I began my job searching in September 2007, in my desperation to free myself from my current work hell, I was applying for jobs that mirrored my current position. After attending a conference in November and getting a chance to speak with my peers about my job search I became convinced that I should be looking for a job that would advance my career - not stagnate it. It took travelling half-way across country (and away from work) for me to regain some confidence in my abilities and realize that I was capable of more than I am doing now.

Well, I think I just answered my question...but here goes anyway.

If the Illinois people call me and offer me the lower-level position, should I take it? Do I pack up and move half-way across the country because I need a job so badly that I have to accept any reasonable offer? Or, do I hold out for the more interesting and challenging jobs that I have applied to and risk not being able to pay my bills and my lease running out? How are you supposed to make these decisions. Most would say don't worry about it until it happens but, I want to be prepared if it does.