I'll start off by giving due credit to the Libs: against all odds and most predictions, they eventually elected their most deserving contender as party leader. But while Dion isn't without some substantial strengths, his victory also opens up a lot of opportunities for the NDP to continue its growth.
The most interesting question will be how Dion's history in cabinet affects his candidacy. While Dion's focus on the environment has certainly won him plenty of admirers, he'll now face a difficult task in trying to make that his central issue while at the same time justifying his own ineffectiveness as Environment Minister - having contributed to the Libs' legacy of delays, then implemented a plan which by all accounts would have fallen short of Canada's Kyoto targets. And with the NDP and the Greens both able to claim greater interest in the subject while avoiding the taint of past failure, a greater focus on the environment as an issue doesn't seem likely to be a huge vote-winner for the Libs (though it could push them toward government by draining votes from the Cons toward the NDP and Greens).
Similarly, Dion's series of stances on federalism (particularly his shift from trying to undermine a Lib motion on nationhood while supporting the same from PMS) will provide something for everybody to dislike. Meanwhile Jack Layton can now put himself forward as the most prominent federalist who hasn't tried to deny the status of "nation" to Quebec or the Quebecois in one medium or another.
Then there are the plain weaknesses - which only seem likely to exacerbate existing difficulties for the Libs. Others have already pointed out the unlikelihood of a Dion-led party building much support in the West. Which only opens up the door even further for the NDP to win over disaffected Cons and other voters who didn't think that a party which had its roots in Reform would turn out to be a unprincipled as PMS' bunch.
And while Dion himself emerged entirely unscathed from the Libs' antics over the last decade, it'll be difficult for a prominent figure under their previous scandal-ridden regimes to argue that the Libs have moved past those times by electing him. Which will make him a tough sell for voters concerned about the lack of genuine accountability offered by the Cons.
Ultimately, Dion appears likely to prove far more effective at genuinely opposing Harper than any of his competitors would have been. But that also opens the door for the NDP to brandish its own credentials on progressive issues in comparison to the Libs' tepid track record. Which in the long run could (and hopefully will) be as good for the NDP's electoral chances as it is for the country as a whole.
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