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Republicans should, of course, celebrate their win in Massachusetts.  In terms of policy, it does mean a significant shift in the Senate in their direction.  If they want to take advantage of that, they can probably get some policy results that they, and their constituencies, like.

What is likely to happen is that Republicans will overinterpret this election as further confirmation that their rejectionist strategy is a winner.  I continue to be unconvinced.  While I agree with John Sides that it's a mistake to try to interpret this particular election beyond what our very limited evidence can suggest, would send readers to John Sides for more careful analysis of this specific election, the bottom line, to me, is that Obama and the Democrats are suffering above all from a terrible economy.  Obama, at the end of a full year of his presidency, is at 50% approval.  Would he be doing significantly better if the economy was the same, but Republicans had dropped their over-the-top rhetoric about death panels, the dangers of trials for terrorists, ACORN, and the rest of it?  I very much doubt it.  Obviously, Republicans should oppose Obama and the Democrats on substance, sharply if there are (real) sharp disagreements, which is the case on many policies.  But the rejectionist strategy they're following (oppose Dems at every turn, regardless of policy difference) is, I continue to believe, a real mistake.

What's the cost to Republicans?  First, on policy, they lose the ability to negotiate on behalf of their important constituency groups; as we've seen, this can have the effect of actually driving some of these groups (the doctors, for example) right out of the party.  Second, embracing the crazy yields, well, the crazy in charge of your party.  Republicans stand to gain in the 2010 cycle because the economy is lousy, because Democrats have a lot of exposure after two terrific cycles, and because the party of the president almost always does badly in midterms.  If, however, Republicans nominate candidates who have embraced the crazy, they will be far more vulnerable to counterattacks than if they nominate good, solid candidates (and not every Democratic candidate will emulate Martha Coakley and not get around to attacking crazy things that their opponents say until the last 48 hours). 

However, no one is going to listen to advice like that.  Republicans are invested in a particular interpretation of 1994, and yesterday's election is only going to reinforce that interpretation, whether it's correct or not.