As the dust settles on the conventions and the Palinpalooza cools down to the point where the plasma becomes transparent and stable atoms can form again (an LHC-related metaphor seemed in order today), three truths emerge, and all of them accrue to McCain's benefit.
First, when McCain faced the possibility that the Democratic bounce would escalate into an insurmountable lead for Obama, he took a calculated risk that paid off beyond his wildest dreams. McCain's penchant for making these kinds of gut calls is well-known. They don't always work out. The selection of Palin did. A good gut is an advantage for a President.
Next, when the Democrats learned of the Palin selection, their first considered action was to try to discredit her. And "discredit" is fairly charitable; they tried to slime her. Democrats have long held as a central tenet that only Republicans could be so evil as to use distraction and slime as political tools. Wrong. Even worse, the GOP now has an excuse to use distraction and slime against Obama, which they have been doing with undisguised glee and their usual competence ever since.
Finally, when faced with an emergent crisis, the Obama campaign got knocked back on their heels and still haven't managed to recover. This is the campaign's first "3:00 AM moment" and their actions do not inspire confidence in their crisis management skills. For a candidate that has yet to close the deal on having enough experience to lead, this sure didn't help.
So Obama has taken a couple of heavy hits and McCain has received a boost. None of this is a death blow to the Obama campaign but it has had a very bad couple of weeks.