The reason lying freak Rick Santorum is so scared of the K Street Project is fairly simple - it's really the only thing that the Casey campaign is running on at the moment, and one of the few major areas of stark difference that Casey can capably draw. If this stuff stays in the news over the next few months it'll be fairly easy for it to be the dominant campaign narrative in the local news.
I'm not sure how being a lying freak about the whole thing is going to help him, but maybe it's all he's got.