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After all the “bubbles” of the last ten years or so (real estate, dot-com, etc.), could the market be returning downward to a “true measure” of its actual value, vis-a-vis all the “pumping up” of the last decade?

When I look at a chart of the DOW and see that a logarithmic scale is used to try to make it look somewhat linear - and even then it doesn't - it seems vastly overinflated. Starting in 1995, it has increased ridiculously fast - our economic growth hasn't been THAT great compared to previous decades. And I think analysts have been saying that the P/E ratio of most stocks have been too high.

Yup - you're probably right. But it doesn't help those that had money in while prices were inflated. (myself included) The DOW might recover, but many of our portfolios won't (in time to retire). And if Obama wins, well....it's all over. Higher taxes and socialism never helped a market.

The DOW might recover, but many of our portfolios won't (in time to retire)

If a stock is bought above its real worth, money is lost then and there. The previous owner's profit will come from one or more future owners. If demographic trends cause more money to be pulled out of the stock market than is being pushed in, stock prices will fall to slightly below their real worth before very many people cash out. Having them fall to match their real worth sooner rather than later is generally a good thing.