I'm surprised it happened so quickly. But, really now. When you get hurt in your return match, something is wrong. When he returned, he was pretty much one injury away...and the one injury came the night he returned.
I've always liked Kennedy. I think he was shot up too fast, but given time on Raw (and health), he could have amounted to something. The biggest problem for Kennedy was time...he was always great on the mic and he had a good foundation in the ring, but he didn't have any time to work with it. If you took out all the injuries, I guarantee Kennedy would have seen world championship gold, for better or for worse. Plus, all that time wrestling would have meant more time working on his ring skills, and you'd have seen a much more polished Kennedy. He was a walking load of potential dragged down by injuries and overpushing.
Really, though, this is Vince's fault. He clearly had no plans to bring Kennedy back that night, or the Kennedy ad the previous week would have said "Next week". It was going to be a while, and that would have been best. Plus, bringing him back in a ten man tag, is a bad idea. It's a naturally chaotic match and that's the last thing Kennedy needed. A singles match, preferably with a jobber, that Kennedy could work nice and structured with, would have been so much better, and severely reduced the risk of injury. But, just to fuel the ridiculous Denver vs WWE feud, he was rushed back, and look what happens.
Kennedy is injury prone, and its highly unfortunate. But if Vince had taken more care with Kennedy's return, the likelihood of injury would have been reduced, and Kennedy might not be in this position.
This is definitely not the last of Kennedy in a wrestling ring, though. At least, he'd be crazy to retire. TNA would grab him in an instant, and push him to the moon. Mr. Kennedy is certainly copyrighted, but Mr. Anderson probably isn't, and he could roll with that. Anyway, he could be real big for TNA. Even if not, Kennedy is not a stranger to the indies, and he could be an indy GOD if he stepped down there. Contrary to popular belief, a guy working a full indy schedule makes decent money. Certainly not a WWE contract level, but a solid amount. Kennedy, as ex-WWE talent (and fairly big ex WWE talent) would be in huge demand in the indies, and could make some good money. Either way, I have to think he sticks around wrestling - he's got too big of a chance to capitalize on his popularity and too long in the business to give it up. Maybe he'll retire quietly, and if he does, that's good for him, but he's got a big opportunity to make waves elsewhere and I hope he takes it.