MORE CLINTON RETREADS!
Seriously though, I think this is a good pick. He has no intelligence background, but I view the CIA Director would be more of a manager anyway. Considering the CIA's past history, I think an outsider is a good idea.
Unfortunately, no one seems to have told Diane Feinstein, the new Senate Intelligence Committee chair. So this could cause some interesting blue on blue fire, though I fully expect Senator Feinstein to be singing Mr. Panetta's praises come the committee hearing.
If I had my way, the CIA as it currently exists would be disbanded and replaced by a small central clearinghouse of an agency. In my world, civilian intelligence would be transferred to the State Department, Commerce Department, research bodies of certain other government agencies, the NSA and NRO (and as necessary, the FBI). The CIA would function coordinate the information from the civilian and military intelligence departments.
This pick further helps the cause of Italian world domination. If my father, staunch conservative Republican that he was, was still around, his comment would have been -- "Do you know he is Italian?"