I haven't been this disappointed since NH.
As far as what Obama needs to do to "hit back" at Hillary, he should lead with his strength--wait for it--change.
Specifically, he should highlight, in some more controversial, attention getting way (like the red phone ad) that Hillary's foreign policy is nearly similar to that of Bush's. Such an approach would damage Hillary should she become the nominee. But it would help change the new-strategery-same-as-the-old-strategery meme that Obama is somehow less experienced than Hillary, and that the election itself is about experience as opposed to change. Obama should emphasize, again, his challenge to the political system itself, in contrast to Hillary's focus on herself.