Fractal Growth

Im about to graduate from an undergraduate chemistry program. The exact degree is Chemistry w/ Biochem emphasis. I have done two years of undergraduate research in a organometallics lab. In the past two years my professor has released four or more papers and even had a catalyst patented. Myself and my colleagues in the program do our best at staying encouraged throughout the program. It seems that the majority of the students have below average GPA's which is frustrating since most of use originally had our mind set on graduate school. I have done everything in my power to become educated on the field as well as career options and making connections. Graduate students even tell me my professors could really care less about teaching. However I know there are some that are very helpful and I know who they are. Some of my students have the thought of either sticking it out through grad school or just giving up completely. This is where I get stuck at. I am confused on how to go about making my decision in applying for graduate school. I honestly think the only thing really going for me is getting in the graduate program at my school. When I started the lab I was just a know nothing student with no experience. Now I am always around and the professor knows the true worth of my work capacity. I think he will consider letting me into his lab after graduation. The question about my application process to other programs is a whole other question in itself. My gpa is below average at 2.5. On top of that, I failed two classes last semester which is a HUGE screw up when considering those grades will most likely be my first semester grades a school looks at. Those classes where Physical chemistry 2- quantum mechanics and genetics. I suppose I could wait until January when I receive gracious grade changes. I know my bad gpa is not the end of my application process. However if I pass up the opportunity my professor grants me, I don't think I will be able to get that back. Then I begin to think, if I don't get into a school within the first two years of applying to schools, will I ever even go back. I really enjoy chemistry. Should I do everything I can to stay in it though? Chemistry is not my only dream. I really had plans of being a chemist and living by a mountain town but now those two things are beginning to conflict it seems.