I think this is profoundly complicated and momentous event, defying easy or quick analysis. Some initial, perhaps contradictory, thoughts which may — and probably will — change as the story develops:
1. These were free elections and Fatah appears to be honoring their result. That is a huge victory for democracy and shouldn’t be downplayed.
2. The bad news is that Hamas did very well. This doesn’t speak well of the Palestinian electorate — but it speaks even worse of Arafat’s dying regime. The silver lining (see point 1) is that there is now democratic accountability or, more accurately, a precedent for accountability.
3. It could be good news that Hamas won outright. If Hamas did well, but didn’t win outright, they would probably serve to push the government in the same direction while not being accountable for the government’s failures. Moreover the United States would have been in an even more complex situation of ignoring some terrorist ministers while recgonizing the government they belonged to. This at least makes the choices — for everyone — much more clear. Cut off from foreign aid — hopefully — Hamas may prove themselves incapable of governing. Meanwhile, Fatah can use some time in the wilderness, away from the purse strings, in order to separate out the purely corrupt from the incidentally corrupt, the kleptocrats from the democrats.
4. The fact that Abbas is still president — he was elected separately last year — complicates the issue. Will the US work with Abbas even though he will undoubtedly ask the winner of the election — Hamas — to form a government? Will he become the good cop? Or the respectable voice of the bad cops? I dunno.