According to Ken Fisher's new book, PE ratio has no impact on stock returns whatsoever and even went so far as to say that High PE stocks outperform Low PE stocks.
One of the best conclusions i have seen in response to P/E arguements, is that P/E is one dimensional. I.e. P/E in 70s may have different bond/interest/inflation conditions than 2000s, although both look the same. When shiller makes the P/E argument, I don't see him taking into account the premium over bonds during the periods evaluated (although, he does look at real returns). Also, for individual stocks; two stocks may have identical trailing P/E, but ignore things like earnings growth projected out into the future.