I say once again shut down because, as you may remember, this has happened before. In the fall of 2010, Pakistan shut down the Torkham border crossing in response to an American helicopter attack on Pakistani forces. Following a week-long snag in the supply chain that saw a number of insurgent attacks against supply trucks unable to cross the border, American forces acquiesced to Pakistani calls for an admission of guilt and an apology.
So no big deal right? Because this is the first incident since the events of last October, both sides are probably willing to call it even. Well, except for this. And this. Oh yeah, this too. As such, it is unlikely an apology and an admission of guilt will gloss things over this time. Consider that in addition to cutting off the aforementioned supply crossings, Pakistan has also given the Americans 15 days to vacate drone forces from Shamsi Air Base in western Pakistan. This may seem like a harsh punishment, but it would be surprising if the closing of a drone base in western Pakistan really hampered the operational range of drones in the area. What would really matter is if Pakistan came out and explicitly stated that no American operations, drone or otherwise, were to occur in their territory.
The reason, to me, this is such a potential powder keg is that it combines the issues found in last year's episode with the current state of more volatile US/Pakistan relations. Not only were Pakistani troops killed in this raid, but it was, at least based on the boundaries the Pakistanis are using, a violation of Pakistan's sovereignty, an issue that Pakistan has become more protective of since May's mission to kill bin Laden. It also seems likely that the civilian government in Pakistan is not in the most stable position, and one of the most time honored traditions in international relations is uniting a domestic constituency against the Americans.
This incident by itself is not an overly important event in US/Pakistan relations. However, the incident does not stand alone. Based on recent events between the two countries as well as the domestic situation in Pakistan, the US and its allies should count themselves lucky if the consequences stop at a temporary border closing and a relocation of drone bases.