I think [McCain] started to see the highly negative turn that his campaign was breeding. People are easily led into a view of Us-v-Them, which can easily create clannish type extremist actions. This fact is magnified when there is a sense of instability and fear. Palin's claims that Obama is a terrorist by association resonanted with this tendency. It's much easier to use prejudice and place blame on some "other", than to suggest that it may be our own actions which have caused problems.
This is much of the psychology that fuels many extremist groups and cults.
Rallies where people shout out to kill obama, that he's an "Arab", that he's a terrorist..., simply look way to similar to rallies of blossoming extremist movements. It's one thing to mudsling, it's another thing to fuel a hate movement.
It seems McCain has realized what his campaign was doing and is attempting to defuse it.