First the "Big States" argument is skewed. It's a primary and she didn't wipe him out by 20 points. In a general election, it looks pretty good that a democrat would be successful. Any Democrat.
now the real topic
Alright, I know that seemingly Kentucky would be Clinton country. But what folks don't know about Kentucky is that the creative class has grown immensely in the last 5 years which bodes well for Obama. As well the ethnic diversity in the state is changing. Louisville (my town) is probably leaning toward Obama without question. His street signs are everywhere. This also speaks well for him in Southern Indiana. According to Open Secrets, He leads in fundraising in this city and is nearly tied in fundraising in Lexington. Both cities have large and active youth cultures and the two largest public universities. Another city to watch is Paducah. Very large creative community and another university town.
In Appalachia he needs to make a real point to talk about the problems of drugs, poor healthcare and poverty which are rampant in those areas. If he can really be specific and real with the people who live in those areas, and are either out of work or working for coal mines (or Walmart-hit Hillary but don't dismiss the work.), he will do better than anyone expects. At this time, the mountains don't really know him.
Another great point to bring up is the possibility of green jobs (specifically what those are and how they'd fit in the landscape) and the problem of mountaintop removal. People want the jobs and the opportunities but do not want to destroy their ancestral homes. The culture of appalachia is one that Obama needs to navigate well and really learn. Also he needs to be simple and specific. The education level is not particularly high but people are definitely not ignorant. If they are leveled with then he'd probably be surprised at the openness to his ideas. Speak plainly and straight. He should really use Rory Kennedy's support here.
One problem spot is Ashland. Big Oil. They like Hillary. (of course)
Illegal Immigrants are a big population in Kentucky and Southern Indiana. He'll need to address this issue also straight on.
Basically my point is, as a Kentuckian, this ain't the same state it always was.
Some things don't change...like Mitch McConnell (gag and we're working on that) but many things do change.
The folks are on the ground everywhere and in unexpected places. I don't think Hillary is going to walk away with Kentucky. Obama has some challenges here but if he can be specific and simple, the results could be surprising. This is a great state for Obama to pick up some republicans as well, although they can't vote in the primary.
Basically Kentucky isn't sewn up for Hil. So don't count us out.