You pose two very interesting questions Ineophyte.  I will give them a shot:

Personally I think if the R's win there will be more deficit spending and the dollar will drop more than with the D's. Am I wrong?

Probably.  Taxes are likely to be less under Republicans.  That does not necessarily mean the overall government revenues will be less.  Both Republicans and Democrats have big plans for spending on more programs.  They merely differ as to what those programs are.  My personal opinion is that some divided government might offer the best chance for some deficit reduction.  Since the Democrats almost have a lock to control both houses of Congress after this election, that would mean electing a Republican president.  If the Democrats get the presidency along with both houses of Congress, I suspect that deficit spending will substantially increase, to the detriment of the US dollar.  The only thing that would prevent that would be the economy to grow at an above average rate.  This is unlikely with the significant tax increases the Democrats are advocating, and if (as is unlikely IMO, though it may be just wishful thinking) they also pass protectionist trade policies that some Democrats are advocating, the economy could actually contract rather than grow, and the deficit would likely to go through the roof.

Does the smart money already have the winner calculated into their investments?

I would say no.  My guess is that it is still a bit early. 

FWIW, I personally would look for a relatively poor environment for global stocks in general and US stocks in particular in the 2009 time frame, REGARDLESS of who is elected president.  There is likely to be a lot of uncertainty (which the market does not like) and some of the economic policies that the new president, whoever it is, are likely to adopt will most likely cause some pain at least in the short-intermediate term.  No disaster, but a lot of muddle through for the next couple of years.

This week oil and most other commodities are undergoing somewhat of a correction.  My personal opinion is that if you have not done so already, this would be a good time to take a 10% position in either gold bullion, gold coins, a gold ETF, gold mining shares, gold/precious metals stock mutual funds, or other similar investments.  This would help to protect your portfolio against a falling dollar (among other things).  Also, if you are concerned about dollar weakness (as I am), you might make sure that any foreign or global stock stock mutual funds you own do not practice currency hedging against the dollar.  Regards.

MWL