The night's defining moment — which Democrats hope to transform into a turning point – came when Rep. Joe Wilson (R-SC) shouted "You lie!" as Obama claimed his plan wouldn't offer free care to illegal immigrants.
Wilson's boorishness — for which he quickly apologized — enraged audience members on both sides of the aisle.
It also overshadowed a speech that included some of Obama's harshest attacks on his GOP critics to date, including a denunciation of "death panel" alarmists as liars — a veiled swipe at Sarah Palin — and a warning to Republicans who want to "kill" reform.
"What we have also seen in these last months is the same partisan spectacle that only hardens the disdain many Americans have toward their own government," Obama said. "Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge. And out of this blizzard of charges and counter-charges, confusion has reigned.
"Well, the time for bickering is over. The time for games has passed," he added, to Democratic cheers.
The president's combativeness, coupled with Wilson's behavior, clearly energized Democrats — to the point where few were in a mood to criticize Obama's lack of specifics or the fact that he offered no ironclad commitment to inserting a robust public option in the final legislation.
Ben Nelson (D-Neb.), one of the upper-chamber Democrats most skeptical of the White House reform efforts, was impressed by Obama’s speech.
"I think it was a bit of a game changer," he said.
"The speech galvanized support along the Democratic caucus across the political spectrum, from the progressive caucus to the Blue Dogs, and everybody left determined to get something done this year," Rep. Chris Van Hollen (D-Md.), head of the Democratic Congressional Campaign Committee, told POLITICO Wednesday night.
Republicans — some of whom expressed open contempt for Obama by scanning their BlackBerrys or holding up copies of GOP bills during the speech — saw the president’s remarks as a Democratic call to arms that belied the president’s oft-repeated calls for bipartisanship.
"I was incredibly disappointed in the tone of his speech,” said Lindsey Graham (R-S.C.).”At times, I found his tone to be overly combative and believe he behaved in a manner beneath the dignity of the office. I fear his speech tonight has made it more difficult — not less — to find common ground.
"He appeared to be angry at his critics and disappointed the American people were not buying the proposals he has been selling... If the Obama administration and congressional Democrats go down this path and push a bill on the American people they do not want, it could be the beginning of the end of the Obama presidency."
Rep. Mark Kirk (R-Ill.), who is running for Obama's old Senate seat, said, "He talked at us. He didn't listen to us... It was a missed opportunity."
Added Sen. Bob Corker (R-Tenn.): "I sat there tonight wondering what the purpose of this evening was. I was hoping to hear the president flesh out a middle ground, but instead we heard platitudes and campaign rhetoric."
But Sen. Tom Coburn (R-Okla.), one of Obama's most consistent critics, saw some room for compromise. "It was a good speech, the problem is that what he wants and what they've written are two totally different things," said Coburn, an OB-GYN. “I'm willing to compromise to get things fixed. But I'm not willing to put the government in charge because we don't have a good track record."
Despite the energized tone, Obama offered cold comforts to liberals, no detailed road map for reform and an endorsement of the public option that fell far short of a guarantee.
"It is only one part of my plan," he said of the option. "To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage affordable for those without it. The public option is only a means to that end - and we should remain open to other ideas that accomplish our ultimate goal."
But the fight over the public plan was eclipsed by Wilson's outburst halfway through Obama's address.
Wilson was quickly shouted down by Democrats, and House Speaker Nancy Pelosi shot a withering glance at the GOP side of the room. White House chief of staff Rahm Emanuel demanded an apology from Wilson - as did Sen. John McCain (R-Ariz.).
A chastened Wilson quickly obliged, issuing a public apology and calling Emanuel personally after the speech, according to a White House source.
"This evening, I let my emotions get the best of me when listening to the president's remarks regarding the coverage of illegal immigrants in the health care bill," he wrote in an email to reporters.. "While I disagree with the president's statement, my comments were inappropriate and regrettable. I extend sincere apologies to the President for this lack of civility."
House Majority Whip James Clyburn, a South Carolina Democrat, said the remark was the latest in a long line of political attacks by Wilson.
“Joe Wilson took our state's reputation to a new low. I thought Mark Sanford had taken it as low as it could go, but this is beyond the pale," Clyburn said.
"Joe is very confrontational," he added. "He held his first town hall meeting three blocks from my house at my kid's high school. Now why would he have this town hall meeting in my congressional district, three blocks from my house in my kid's high school? It's not in his district.
That's the kind of guy Joe Wilson is. He loves confronting people. So he was confronting the president, just as he was confronting me."
Sen. Dick Durbin, the second-ranking Democrat in the Senate, predicted that Wilson’s outburst would have consequences.
"The person who said it will pay a price,” Durbin said. “I think the average American thinks that the president and the office deserve respect and that was a disrespectful comment. They'll pay a price in the court of public opinion."
Alex Isenstadt, Ben Smith, Jonathan Martin, Manu Raju, Patrick O’Connor and Lisa Lerer contributed to this report.