I'm not so sure that it can't. For one thing, with Arnold being Republican i imagine it might be even easier to pass through liberal legislation...since where were the opposition come from? Much in the same way that it's easy for President Bush to pass spending increases (and things of that sort) whereas if Bush had been a Democrat then Republicans would have raised holy cane about it and it might not have been so easy. For another, with Arnold at the helm who knows when the next chance to elect a conservative or even moderate Republican will be. My guess is that there would have been a decent chance in this election if Arnold wasn't running, or, if not this time, then maybe the next election if things continue to get worse (as they likely will). But with Arnold as governor Californians will probably be stuck with a liberal leading them for quite a while longer - either in the form of Arnold or else the Democrat that defeats him in some future election.
The only good things i see are this: 1) some people might vote Republican, and get used to the idea of voting Republican, who otherwise would have recoiled at the thought before this...so the term Republican might become more palatable to some; 2) if Arnold turns out to be a team player it would help Bush win California, or at least put it into play, and therefore force Democrats to pump more resources into keeping California a "blue" state.
However, as i said before i have my doubts about him being a team player.