I don't know either whether he meant it as a direct insult or not, but the other times the phrase was used was before Sarah Palin essentially appropriated the word, "lipstick," for herself. Or pitbull too.
It's a common phrase in America and everyone knows what it means. Using it now is a big no-no, though.
It's all in the timing of when you use it. When McCain used it, for instance, he was referring to Hillary Clinton's universal health care plan, long before most people had ever heard the hockey mom/pitbull joke or had ever heard of Palin. Using the word, lipstick, from here on out will always be taken as a reference to Palin.
If McCain wins the election, people may point back to this incident and say that this was Obama's equivalent of Michael Dukakis riding around in the tank, John Kerry's "Reporting for duty," or Howard Dean's scream.
