UPDATE: Marc Lynch has a must-read on why this is (probably) the end of the ‘transition’:

But today’s moves by the Constitutional Court on behalf of the ruling Supreme Council of the Armed Forces (SCAF) seem difficult to overcome and likely to push Egypt onto a dangerous new path. With Egypt looking ahead to no parliament, no constitution, and a deeply divisive new president, it’s fair to say the experiment in military-led transition has come to its disappointing end.

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It’s a little hard to know what to make of today’s decision by Egypt’s Supreme Constitutional Court not to disqualify Ahmed Shafiq from the presidential race (not surprising), but also to invalidate one-third of the seats in the People’s Assembly, thereby dissolving the entire lower house of parliament (surprising).

I think it’s safe to say Tahrir Square is going to be packed tomorrow and throughout the weekend with protestors bitterly opposed to this latest development by a court that’s primarily composed of judges appointed in the Mubarak era.

Make no mistake, the Supreme Constitutional Court represents the Egyptian ‘deep state’ to which so many refer in hushed terms — there simply remain in Egypt’s government many, many remaining sources of power connected to the Mubarak regime.

It certain appears to be a move by the Supreme Council of the Armed Forces to assert its power, in the face of the Muslim Brotherhood controlling 235 of 508 seats in the now-dissolved parliament and perhaps likely to win this weekend’s presidential election as well under Mohammed Morsi’s candidacy.

In declaring Shafiq eligible for the presidency, the Supreme Constitutional Court declared that the Political Isolation Law — which bars former Mubarak officials from running for office for ten years — is unconstitutional.

SCAF will be taking over parliamentary duties with immediate effect, although prior acts of the parliament will not be anulled.

It’s hard to know, though, whether this is the beginning of a more run-of-the-mill military coup.  It still seems like the SCAF is trying to play the same role in Egypt that the Turkish military played for so many years — a counterweight to rising Islamism and a “guardian” of the secular state.  Yesterday, the justice ministry issued a decree allowing military and intelligence to arrest citizens suspected of crimes, restoring in part some of its powers under Egypt’s emergency law.

So the outcome is not looking too good right now for Egypt’s revolution.

It’s worth, however, stepping back for a moment to consider where Egypt stands:

• It seems likely that Egypt will hold the third set of parliamentary elections since last winter.  The Muslim Brotherhood and the Salafist Al-Nour Party are currently, by far, the largest and second-largest blocs in a parliament that’s done fairly little since it was elected, except for squabbling. In the January elections,  the Brotherhood won 235 seats under the banner of the newly formed Freedom and Justice Party, the Salafists won 121 seats, and the secular New Wafd Party and the secular liberal Egpytian Block won 38 and 35 seats, respectively.
• If Shafiq wins the presidency this weekend, his detractors (of which there are many) will suspect that SCAF-engineered fraud had much to do with it.  If Morsi wins the presidency this weekend, it will be seen not as a mandate for the Muslim Brotherhood, but now more than ever a vote against the SCAF and the Mubarak regime.
• Regardless of whether Shafiq or Morsi wins this weekend, no one knows whether the presidency will truly be powerful or not, because Egypt still has no constitution.
• Furthermore, no one knows whether the deal struck just last weekend for the Constituent Assembly — the body that will draft the constitution — to be comprised 50-50 of Islamists and non-Islamists even still stands after today, since although it had previously been agreed by Egypt’s parliament, it hadn’t been signed by SCAF.

Maybe Mohamed ElBaradei was right to boycott the whole affair.