OK, I've heard all sides and here's my take.
Relationships with the press are a two-way street.
1- When you allow an embed, there are ground rules. I realize that we don't know what those were with this guy from Rolling Stone but I've been a PA long enough to know that the embeds are required to follow ground rules. If you break those, there is no more access. All media people know this because they want future access.
2- Military people know, or should know, never trust the press. I don't care how cozy things become, you are always on the record. Period. You should never, ever, forget this one little rule and it appears that this is what happened.
3- This will have consequences for us on the ground and I know because it already has. I've been fending off mid-level officers and my senior guy all week. Begging them to remember that embeds are OK (we've been doing it for years); that relationships with the press are necessary (how else will you reach the people?)
The military-media relationship has always been strained but when a snot-nose like Michael Hastings has the audacity to say all over national television that the relationship is an illusion, he obviously doesn't seriously understand his position. On the other hand, for the military folks to honestly assume that it is OK to say the things they did in front of him was just plain stupid and arrogant.
Gen McChrystal didn't put up a fight because that is not what senior-ranking officers do in the Army. They take the fall for the bad things and let the junior ranking folks take the accolades for the good things. It's called leadership.
Will this have an effect? Yes. And we'll see it soon.