Congressional Quarterly is ranking the race as competitive now too. It ranks the race as Republican Favored, which means an upset is possible. Here's what they had to say:
Walsh has handily won nine times in a district centered on his home of Syracuse and didn’t even draw a Democratic opponent last time. He’s become known upstate as a prodigious champion on the Appropriations Committee for his constituents’ causes, though a recent reorganization of the panel reduced his clout there. He now appears more vulnerable in territory that narrowly favored Kerry in 2004. The recruited challenger is Dan Maffei, a veteran Capitol Hill press secretary who’s worked for New York Democratic icons Charles B. Rangel and Daniel Patrick Moynihan.