You can bet that will be heard around the world. Making peace with Arab nations just became harder. On the other hand, Arab-American voters (in the millions, and in swing states) just moved out of "undecided."

i thought the same thing in the back of my mind when i watched this. apparently arab and decent family man are mutually exclusive.

It is a classic example of racism. It's the worst sort, the implicit and underlying.

You're right. What the right doesn't see is that racism isn't about artery-popping hatred (though some of those dinosaurs still remain) as much as it is about largely unconscious unfair negative stereotypes - exactly what McCain's ads attempt to invoke. Ironically, he reveals himself to be among the ones with whom such ads might be effective.
They will say "He didn't mean it that way." That's doubtless true - and that proves the point: He simply doesn't get it.