From my perspective as a former junior officer in the Marine Corps, and my husband's experience as a former junior officer in the Army (including, in his case, service with the 101st Airborne in 'Nam), I have a few things to add to Cohen's analysis. The difference between a military unit and a bunch of armed thugs who happen to be wearing similar clothing is discipline. That discipline includes--has always included--standards of behavior towards both superiors and subordinates. We were taught in OCS and Basic School--and it became obvious later on various assignments--that the higher the rank, the more need to maintain those standards of behavior, including military courtesy.
When a senior (whether NCO or officer) does not adhere to those standards, the effect on the unit is swift and dire. Standards fall not only in the specific area where the leader failed, but in other areas as well. Disrespect of seniors goes right down the chain of command--and spread sidewise to disrespect of other regulations. Leaders must model correct conduct...period. Correct conduct in danger, certainly, but there are other dangers than lead in the air. When personal feelings and opinions are allowed to subvert standards of behavior, the ability of that unit to function--both within itself and in cooperation with other units--suffers.
Whether in time or war or in peace, military personnel are largely young, high-spirited (or they wouldn't be there) and motivated to action, not reflection. They are not, as someone once said, "choir-boys" (or girls) and when you add to their innate characteristics training that makes them mission-oriented, and weaponry that makes them lethal, you have created either the best protectors of the civilian population--or the worst danger to it, as well as a potential danger to one another. Discipline, including military courtesy, is all that stands between a functioning military obeying lawful orders and chaos. This is precisely why standards exist, and why it is so important for seniors to model correct behavior for juniors. .
It is clear that Gen. McChrystal's own disregard of standards affected his staff, and that this (inevitably) affected how that staff interacted with those other civilian and military organizations it was tasked to work with. Whatever the deficiencies of the other people involved, his behavior, and the attitudes and behavior he tolerated in his staff, made things worse. His lapses of judgment have not been minor, but serious. Different forms of lax discipline create slightly different cascades of bad behavior, but they all end in chaos. It is unfortunate that at some earlier point in Gen. McChrystal's career, his gaps in understanding were not addressed by a commander, but given his age and the state of the military post-'Nam, I have some pretty clear ideas how it slipped by. The post-Nam decades were a time of intense politicization of the military (something already beginning during 'Nam, but moving much faster after the change to an all-volunteer force.) He probably had commanders who felt perfectly comfortable openly criticizing seniors, including the President, and learned from them that such criticism gained approval with peers and immediate seniors. It's a hard lesson to unlearn. A naturally aggressive personality coupled with great intellectual gifts and an innate talent for military science would be the last to understand the need and develop judgment. In an ideal world, people with his talent and his weakness would be caught somewhere in field grade and would not be promoted to flag rank without some serious work on their attitude (command and staff college is supposed to accomplish some of this.) If he could not be trusted to show the judgment a commanding general needs, he could have been diverted to some post in which his talents could be used and his weakness avoided.
And now his lack of judgment--which has spread to his staff--has influenced and damaged his subordinates, and will no doubt affect the ability of his former command to adjust to, and perform well under, a new commander. One can hope (but does not expect, given his personality as demonstrated thus far) that he would admit his errors and take the time to understand what in himself led to them. Such individuals find self-examination hard--but if he could bring himself, or some friend could bring him, to the right sources of counseling, he might be able to grow into someone still of great use this country. Only more harm could come from leaving him in command now.