Mary, I don't think it was a Freudian slip at all, given how commonly that metaphor has been used in the political scene for a long time, including the past year or two.   That said, since Palin had used a different "lipstick on an animal" metaphor so recently, it would have been better if he'd thought ahead how those words were likely to be perceived by some of his own supporters and grabbed by his opponents as ammunition.
It's kind of like the many common expressions that are about "dark" and "light," which have nothing to do with race but might be perceived otherwise if Obama's opponents used them.

I think he clearly was not referring to Palin as the "pig," even subconsciously. If he had her in mind at all -- his remarks were about McCain or about the joint ticket -- in his metaphor, she was the "lipstick" on the "pig" of the ticket's policies.

It would have been better if he'd used a different metaphor -- though I can't think of a good substitute.   But since the media have made such a brouhaha about it, I'd like to see Obama and the Dems RUN WITH IT. Make it utterly clear that McCain and Palin are trying to put "lipstick" on the "pig" of the Bush-Cheney-Rove tactics and policies that they continue to embrace.

G : )