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Yes and no. Conservatives showed they absolutely cannot be taken for granted. Had Hoffman had full support earlier, he might have won. But if RINOS want to hold out, they also showed we can't win without help, even in a conservative district.

What we don't know is to what extent the loss is attributable to a) funding (or lack thereof, which I doubt since Palin nationalized the race); b) organization on Hoffman's part, or c) Hoffman himself (he seemed pretty dull). We can no longer "blame Bush," that's for sure, but it certainly isn't a maxim that merely by putting in a conservative you win. I think the maxim is, "A conservative will always be competitive." Whether that candidate has enough pull on non-social issues (esp. jobs and taxes) to convince the social libs is up in the air in future races.