First, let's sum up the obvious: Russia was way too prepared to respond to Georgia's military operations for this to be anything other than a provocation by Russia against Georgia. Having said that, it worked beautifully. It's very clear that Georgia started the hostilities and, given Russia's status as a peacekeeper in both South Ossetia and Abkhazia, they've managed to muddy the waters just enough that nothing other than feeble protest will be mounted by any outside group. Georgia got suckered.
My prediction is that the current round of hostilities ends with South Ossetia and Abkhazia firmly in Russian hands. (Note that operations have heated up substantially in Abkhazia in the last day.) The Russians will nibble at the border of Georgia proper, but not launch a full-scale invasion. Russia will continue to degrade Georgia's ability to defend itself and chip away at its energy transshipment infrastructure. In short, Georgia will be sovereign and utterly defenseless when the bombs stop falling.
Ben Smith had an interesting piece on the differences between Obama's and McCain's responses to the crisis. Obama appears to have understood the ambiguity of the situation and issued a cautious statement calling for immediate ceasefire and negotiation without laying blame on either side. McCain may not have understood that ambiguity or, more likely, he simply chose to ignore it. In either case, McCain immediately blamed Russia and used the crisis to advocate for a much more confrontational policy against them.
One thing is clear: The US is not going to war with Russia to protect Georgia. It is possible that the US will provide economic and material support for Georgia, but it's looking like the Russians have planned for this and are running a de facto blockade of Georgia, so any help will have to be airlifted or transshipped from Turkey. The chances for a confrontation with Russia are high and the US election is close--my guess is that Georgia is on its own for at least a year. Again, you've got to admire Putin; he's a smart, nasty little cookie. Looks like he had all the angles played just right on this one.
Given the scope of the Russian checkmate, I think I'd give this round to Obama. Better to play it safe and nibble around the edges, rather than adopt McCain's more bellicose but ultimately impotent rhetoric. The real question, campaign aside, is whether this whole episode is enough to rouse Europe to action. Russia can be contained but it's gonna require being willing to face down an oil and gas embargo to do it.
My bet's on Russia.