Most of the people considering it bad news are worried about "moderates" being purged from the Republican party by "conservatives," dooming it to generations of electoral irrelevancy. Why liberal commentators are expressing alarm instead of capering with glee at this prospect is beyond me. I'm looking at it as another example of how badly defined our political labels are.
A "conservative" in American politics can range from someone wanting to use government power to enforce specific behavior on everyone (pro-lifers and creationists) to ones wanting to minimize the power of the Federal government in all areas (Ron Paul). Let's take a look at this Hoffman guy in New York and see what kind of conservative he is. The first four items on his Issues page all boil down to "The Federal Government shouldn't spend so much money," along with four more lower down. So that's 8 of 14 trying to reduce the government's budget and the power that goes with it. Plus a 2nd Amendment discussion that stresses the importance of being able to resist government authority. Meanwhile abortion gets all of four words. So Mike Huckabee this ain't.
The NY-23 election seems to be boiling down to a pro-spending / anti-spending dispute. The nominal Republican candidate is fond of spending, and dropped out to endorse the Democrat when she faced a 3rd place finish. Hoffman is making a stand against increased government spending. That's something you don't have to be a conservative to support. I wish him well, and I'm supporting local candidates who are taking the same stand.