No, he's not shooting himself in the foot. The Swift Vets stated numerous times that they're going to continue running their ads regardless of what the President says. The risk for Bush here is that the Kerry campaign will associate him (falsely) with the Swift Vets and make him look like a dirty campaigner. So it's a wise move to call for the end of all 527 ads, which makes him appear opposed to dirty campaigning (because 527's are running the nastiest campaign ads.) Meanwhile the Swift Vets will continue to run ads anyway and their book will sell in huge numbers all the way through October. The book alone is devastating to Kerry. This is the correct strategery from Bush. He's been misunderestimated on numerous occasions.
If I were Kerry, I would gin up a one minute ad campaign starring John McCain (SBVFT ad is "dishonorable and dishonest") and GWB (Kerry served admirably and he should be pround of his service) and list my military decorations. I would then show it in the battleground states opposite the SBVFT ads.