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I agree that Lee sent Early off to Washington to distract Grant (who refused to be distracted). But when Early arrived on the outskirts of Washington, the city was rather lightly defended, although there were federal troops nearby.

His mistake was in not attacking D.C. immediately. Instead, he rested his men for the night. When the rebels woke the next morning, the situation had changed. The northern forts were no longer lightly defended.

But the importance of the defence of Washington should not be underrated. By capturing the city, Early would have struck a tremendous psychological blow for the south. It would have provided the south with much-needed intelligence of northern operations. Although it was rather iffy whether they could hold onto it or not, it could have had serious repercussions. Almost assuredly, it would have forced Grant to send badly needed forces to retake Washington. Furthermore, it might have provided just the impetus that Maryland needed to join the rebellion. Also, Britain might have felt that the south was winning the war, and they might have decided to recognize her.

Lincoln was receiving a lot of criticism as it was over the conduct of the war, and this might have, at the very least, prolonged the war for another year or two.

The capture of Washington would have been a "morale" thing. It's strategic significance would not have meant much, especially because the government would have been evacuated and Grant already had troops on the way who would have easily driven the Rebels out of Washington had they invaded it.

The real issue would have been dealing with the political fallout, and the northern press (who would have had a field day with it). It would have been a morale victory for the south, not much more. That might have had an equally detrimental effect on northern morale and resolve. Hard to say (if the Rebels took it and were quickly driven out, I doubt much would have come of it except a lot of clamor - however, if they had taken it and been able to hold on to it for a week or two, then the issue would be different).

I like speculating about the war. There's lots of "ifs" but in the end, wars turn on all the ifs, and thus things happen the way they happen. Mistakes are made, opportunities missed, the obvious is overlooked, etc.