This is a rush transcript from "The O'Reilly Factor," January 15, 2008. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: We begin our special report this evening by welcoming Melanie Morgan, a conservative host on KSFO in San Francisco.

All right, Melanie. What are the rules? Let's start with personal attacks on candidates. Legitimate in talk radio?

MELANIE MORGAN, KSFO RADIO HOST: Well, I think that absolutely in talk radio personal attacks for one person is just a sharp division in comparison of positions for another. It's all in the eye of the beholder.

O'REILLY: Well, let me shoot that down. Let me shoot that down. Hillary Clinton has been derided on some right-wing talk radio stations as being unattractive. They have made fun of her body, and I don't know how that could be legitimately considered anything other than a personal attack. Do you?

MORGAN: It is a personal attack for some people. For instance...

O'REILLY: For some people, Melanie? Who wouldn't it be a personal attack for?

MORGAN: Look, I've been attacked for my looks repeatedly on television.

O'REILLY: But you're good looking.

MORGAN: No, I have been called the most unbelievable things. And you know, so — it doesn't — that's not the point.

O'REILLY: But, Melanie, you're dodging the question. If you make fun of you, or if you make fun of Hillary Clinton's body, face, hair, it's a personal attack. That's what it is. Is that legitimate in talk radio?

MORGAN: It's satire in some cases, and, yes, it can be satire. It can be funny. If it is done with a mean-spiritedness, you know, the listeners will tune you out, if they see that repeatedly.

O'REILLY: Not necessarily.

MORGAN: But I would ascribe to Hillary Clinton this characterization. I would call her the "Ice Queen." Now is that a personal attack?

O'REILLY: No, that it is a demeanor situation. You're describing...

MORGAN: Some people would consider it so.

O'REILLY: You're describing — well, some people would be wrong, Melanie. We're here to establish what's right and what's wrong.

Calling her the "Ice Queen" isn't a personal attack. That is your interpretation of her demeanor. Saying that she has a fat butt, that would be a personal attack, Melanie. It has nothing to do with the election. You see what I'm talking about?

MORGAN: Yes, I don't engage in that kind of behavior on the air.

O'REILLY: But you know what happens. All right, so rule No. 1 for Melanie Morgan is she's not going to use personal attacks that have nothing to do with the issues and the election, correct?

MORGAN: Well, I wouldn't go so far as to say that. It's all a matter of interpretation. Look, I don't go into people's looks.

O'REILLY: We can rationalize anything, I guess.

Now, if you like somebody, Melanie, if you support a candidate, all right, is it right to then engage in propaganda, whereby the candidate always is good, never does anything bad and this is the messiah. Is that OK?

MORGAN: No, that's not going to work in talk radio. That doesn't fly. Your audience will see through that kind of equivocation. And it's stupid is what it is.

I like to engage in thoughtful analysis and be a cheerleader if possible, but it's a very difficult line to dance around.

O'REILLY: Don't you feel a little uneasy being a — who are you cheerleading for in this cycle, by the way?

MORGAN: Well, I'll tell you what, I have narrowed it down to two. I am supporting former Senator Fred Thompson. But my close second would probably be former Governor Romney.

O'REILLY: So are you cheering for the men? Are you just going hey, we've got to have these people? Is that what you're doing?

MORGAN: No. I am pointing out Thompson's strengths, and I'm also pointing out how he's getting unfairly knocked.

O'REILLY: OK, would you point out the Senator's weaknesses? Would you point those out?

MORGAN: I have.

O'REILLY: You have? OK.

MORGAN: Yes, I have. Yes, the people who say that he doesn't have the fire in the belly and all of that, we've had that discussion. But you know, I've also pointed out that Senator Thompson is a very motivated man, comes from very humble beginnings...

O'REILLY: Oh, so you like him...

MORGAN: ...is a firm, true conservative all the way across the board.

O'REILLY: I don't think there's anything wrong with that. You like him. You're putting forth what you like about him. That's your job. People can take it or leave it.

Now, who do you really despise in the election?

MORGAN: Well, that's very easy. Senator Hillary Clinton is at the top of my list.

O'REILLY: OK, now stop. All right, so you despise Senator Clinton. Now how far will you take this? So you feel that obviously she's not going to be good for the country if she's elected. But what will you do to, all right, to get that — hammer that point across? How far will you take your dislike of the woman?

MORGAN: Well, I will take it as far as to point out the fact that she is a woman who would not be a good president for all the people. Why do I know that? Because she has personally attacked me through her surrogates and through her Media Matters, which she's claimed credit for starting. She is trying to get you fired. She is trying to get me fired.

O'REILLY: Is that right?

MORGAN: Yes, it's real personal for me.

O'REILLY: Well, everybody knows that Media Matters is a far-left smear machine. So if I were you, I would just ignore them. They've tried to get me fired every hour on the hour for 11-and-a-half years, Melanie.

MORGAN: Absolutely.

O'REILLY: They ain't going to do it unless my ratings go down. Then it won't be them — it'll be FOX that fires me, OK. So they have no — all they can do is dish out the vitriol. But I agree with you. I get angry about the lies and the distortion because there's nothing we can do about it because we're in the public eye.

But between you and Hillary Clinton it's personal. Do you want to harm the woman?

MORGAN: Of course not. The line that you were referring to at the beginning of the show is like the Supreme Court says: It's like pornography; you know when you see it. And as a person who's been in this business for over 30 years, I know where the line is. And the line begins with personal safety issues. You never threaten to hurt anybody or kill anybody in politics. But with politicians, you know, you have to be very careful. You don't lose the license. That's where the line is. You don't lose the FCC license.

O'REILLY: Well, we know on talk radio in the last, I don't know, five years with the advent of Air America, there's never been a more vicious network. You have right-wing kooks out there as well. You know who they are.

MORGAN: In comparison to the left-wing kooks, they are small in comparison.

O'REILLY: Yes, but there's one that is really out there. I mean, you know, not going to give the guy any publicity, but I mean, you know, it's hard to measure hatred on the level that these people bring to the table.

Melanie, we appreciate it very much. Thanks for taking the time.

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