Good Lord, I hope he's not that stupid - and, I hope he doesn't have anyone working for him that stupid. But, he very well may be just that stupid.
When this "event" was only days old, several European countries said that they would pursue war-crimes charges against Gaddafi. That made the outcome of this event very predictable - Gaddaffi was either going to quell the rebellion, or he was going to be removed by force - but it became instantaneously clear that he wasn't going to leave of his own volition. Why? Because he doesn't want to be tried and convicted as a war-criminal. This is a completely different dynamic than faced Mubarak, a guy who's only real concern post-presidency was holding onto his fortune or at least enough of it to live comfortably in some plush resort community.
Plus, Gaddafi is passenger #1 on the crazy train. He, as you say, is just not going to go out peacefully.
If Obama and the people who are working for him can't discern this, then we really are in heap big trouble.
You may have noticed that Biden has been out in front of the cameras lately and when he is he avoids talking about Libya.
We have a President who went to war without the support of even his Vice-President.