Outlining and arguing for your own policies and pointing out flaws in your opponents' policies is certainly fair game, and should be a major part of the process. Talking about political history also makes sense, although a lot gets lost in ridiculous "flip flopping" charges that ignore the reality of adapting to changing circumstances.(I would say Bush's inability to change strategies is one of his biggest flaws.)
Character is subtler category. Certainly, it matters in a president, but this is where most of the truly nonsensical attacks come from. In my opinion, if you are going to challenge character, you should be direct, and you should make sure you have something substantial to back it up. For example, I think Obama's association with Rev. Wright can legitimately be used as a challenge to his judgment or temperment(that is, that he wasn't the personality to stand up and fight against it). The same could be said for McCain and people like Rev. Hagee and Rev. Parsons. But saying Obama hates America, or McCain is intolerant is a bit of a stretch.
The other thing I'm not for are subversive ads. Hillary's "3 AM" ad is the best example. The message is acceptable: "Obama has little experience." Certainly a valid point to make. But the imagery says something along the lines of "if you vote Obama, your children won't be safe." If Hillary truly believed that, she should have come out and challenged directly.
I pretty much agree with Fiery's remarks on family and the trail. If you campaign, you are fair game.
The gaffe-hungry aspect of the media(since they know "horserace" stuff sells) is kind of annoying. If anyone says something remotely dumb, it completely wipes policy off the map for the next few days. Some gaffes are serious enough to warrant coverage, but Sarah Palin's wardrobe spending is not. The RNC can spend their money however they want.
I think another thing to consider is just a fundamental fact concerning debating in general: it's usually easier to try and point out why someone else might be wrong than it is to construct a solid argument for one's own position. Attacking is easier than defending, so rather than establish, which is where new substance is brought in, people attack. There is merit to attacking a vulnerable argument certainly, but too often this strategy is used alone, and the attacker provides no alternative model to support their own position.
Campaigns benefit from this. In a purely academic debate of specialists in a single field, the audience(other specialists in that field) will probably be able to see through this tactic because they all have extremely high knowledge of the subject. However, most voters aren't even specialists in one field, let along the multitude that politics dips into, and it's unreasonable to require that they should be. However, a sometimes unfortunate consequence is that attacking works, because it makes the attacker look dynamic and assertive. Unable to sort through the vast amounts of theory and knowledge in fields like foreign relations and economics, we, as voters, are often left with just that impression of dynamism and initiative.