Like one man commented on OpiniPundit (your link), they did in George Allen for 1 word “macaca” when he was running. Obama’s body language says he knew what he was doing as he played to his supporters.
I agree that he knew what he was doing by making an “inference joke”. What I disagree with is how to respond to it. Sarah is an extremely tough lady and it is best for the McCain campaign to exhibit moderate indignation thus letting everyone know that they know Hussein’s a jerk and then show class by blowing it off as desperate rhetoric.