As the last person on earth to write about Caroline Kennedy, I too am pretty strongly against handing her a Senate seat. Nothing personal -- but I'm anti-dynasty, and feel that a Senate appointment requires at least some minimum threshold of experience and engagement.
It's worth emphasizing though how unseemly the whole thing is, particularly in the age of Blago. The Blago pay-for-play raises some interesting line-drawing challenges. Legislators seek favors all the time -- that's a huge part of what legislating is. But where is the line?
The key I think is to focus one the purpose of the benefit sought. If it's for some plausibly public benefit, then fine. If it's for private benefit, then that's where things start getting smelly. If Blago, for instance, had said "I demand that you push for universal health care. If you do, I'll appoint your preferred candidate." That's pay-for-play in a sense -- it's demanding a "payment" of sorts -- but that's perfectly acceptable in our current system.
Blago, however, sought a benefit not for a public reason like promoting health care (or even helping a coalition group like labor), but to enrich himself. The benefit he sought was purely private.
Of course -- it can get more complicated. Let's say, for instance, that Kennedy's motivation to endorse was to push health care AND to have influence on various low-level appointments (e.g., "a friend of mine has a son who wants to work at DOJ..."). The latter isn't ideal, but that's part of the system -- and it probably wasn't the purpose Kennedy provided the benefit of endorsement. But even if he did, those type of requests are at least below the radar, involving lower-level, less-important positions.
What makes the Caroline Kennedy business smell bad, then, is that it creates the appearance that the Kennedy crew is using their "early endorsement" capital primarily to get one of their own appointed to the Senate. The benefit they seem to be seeking is purely private. Plus, it's not like the NY Senate is an "under the radar" position. It's so extremely high profile and in everyone's face that it becomes obnoxious.
The whole thing just sort of stinks, frankly.