At the outset, I would be remiss if I did not concede the fact that, generally, I am a foxhole guy. Generally, I tend to focus on winning with what I have, rather than lamenting what I don't have. That said, I believe that the loss of Silas Redd, from a football standpoint, will be devastating to the performance of Penn State this year and will have far reaching ramifications in the future.
From a strictly football standpoint, the loss of Redd will devastate the offense, especially in the early part of the schedule. Coach O'Brien is attempting to implement a very different offensive scheme this year that requires the quarterback, in this case Matt McGloin, to make the types of reads and throws that we've seen Tom Brady make for years. Thus, McGloin's part in the offense will be much more substantial this year, as opposed to years past. Having a premier back, like Silas Redd, in the backfield would have alleviated the pressure on McGloin, especially in the early part of the season. Specifically, at least in the early part of the season, defenses would probably have played a lot of 8 in the box against Penn State, which would present a lot of play action opportunities for McGloin to exploit.
Now, unless Bill Belton and others step up, those defenses will be able to drop their safeties into coverage and rush the passer with reckless abandon. Is it possible that Belton and the other backs step up, or that O'Brien utilizes a lot of swing passes to Zordich or others in the backfield? Sure. But, its just as likely that O'Brien will have to hold the tight ends and backs in to block, in order to deal with the increased pass rush that will likely result from Redd's absence.
Redd's absence will likely hurt the defense as well. In the B1G, most of the good schools (Wisconsin, Michigan, Nebraska, tOSU, Michigan State, Iowa, etc.) have really big, really good offensive lines that like to punish defenders. The best way to prevent this sort of thing is with an offense that can control the ball and sustain drives. Without Redd, Penn State will likely not be able to sustain drives enough to keep the defense off of the field for an adequate amount of time. So, while I love Mauti's heart, even he won't be as fresh at the end of the game, if he's forced to be on the field for 2/3 of a game, getting pounded by a 300+lbs. beast over and over again.
Redd's absence will likely also hurt recruiting. Penn State can't play in a bowl game for four years. Sure, the Nittany Lions play in front of 100,000 + fans, but every kid playing high school football dreams of playing for a national title, winning post season awards and playing in the NFL. With the aforementioned problems in the offense this year, Coach O'Brien may have a hard time showing what his offense can do, which would make it harder for the coaches to go into some 4-star running back/quarterback/wide receiver recruit's living room and say "Hey, come to PSU and I can get you ready for the NFL."
It becomes a snowball effect: the lack of a run game leads to inability to sustain drives, which leads to the defense getting tired toward the end of games, which leads to lopsided games and more losses, which leads to much more difficult recruiting. As such, while Coach O'Brien has tremendous skill, Redd's departure makes an already difficult situation much more complicated.