Overplayed. It's not that he's losing just because he's viewed as too moderate - he lost touch at home. The story of him not living in Indiana for decades killed him.
Interesting. I'm curious: Has he actually clearly lost significant touch with constituents, or was it more on the level of perception (people heard stories, as you say, or residency became an overemphasized nugget)?
I don't think it's overplayed in the halls of Congress, though. The fact of the matter is, he's being challenged by a purist ideologue, with purist ideological support. That Lugar wouldn't have lost if he'd gone to more corn boils and done less for the American people is true; that it will encourage his colleagues to do less, say less and think less is also true, and that is a substantial effect.
A Lugar defeat would be a major victory for immigration restrictionists in the Republican Party. Only Bennett of Utah (a lame duck defeated in the Utah Republican convention for renomination), Murkowski of Alaska (defeated in the 2010 Republican primary but re-elected as a write-in) and Lugar voted to defeat the December 2010 filibuster against the DREAM Act. Fortunately, a few Democrats failed to support halting debate, and the bill fell short of the 60 votes needed. Since passage of the DREAM Act would have enticed many Mexican parents to bring their minor children to the USA so they could become US citizens, enactmenmt of the DREAM Act or other amnesty programs would be a long run death knell for an economically conservative Republican Party. We immigration restrictionists need to make it clear to Republican members of Congress that support for amnesty will lead to a defeat in Republican primaries, and a Lugar primary defeat would certainly reinforce that message.
This is a tough one. On the one hand, you want some members in your conference to be more moderate and willing to be bipartisan. Then again, Lugar is really old (80 I think), so he was going to retire sometime soon anyway. Might as well run Mourdock during a relatively strong year for Republicans.
At The Washington Post
At The American Prospect