Edit Apologies, halfway through the response below, I realized I had not really answered the actual question and was more answering something to the effect of "did Confederates in 1863 expect a victory from the Gettysburg campaign?" for which the answer below is that Gettysburg did not really have much time to cement itself in the Confederate consciousness during 1863. While I leave someone else to hypothesize the wider ramifications of a Confederate victory in Pennsylvania, the "decisiveness" of the battle is something that really got embellished in the postwar period and retroactively colored a lot of what Lee was trying to accomplish with the invasion. Invading the North might seem from this perspective to fit into some sort of grand strategic objective, but Lee's intentions for invading were much more grounded, ranging from resupplying his army from Northern stores, giving credence to the pro-peace Copperheads, and preventing the dismemberment of his army to the West. End Edit

The historicity of Butler's claim of the importance of the battle rests on somewhat dubious ground because the importance of Gettysburg as a major turning point of the war was a narrative that only became cemented in the postwar period and the battle loomed larger in the collective memory and commemoration than it did in July 1863. The general knowledge about the war situation was quite murky and Gettysburg formed only one small piece of what was shaping up into a series of reverses for the Confederate cause.

Southern newspaper coverage of Lee's Pennsylvanian campaign was often quite sloppy and incomplete, so it would have been unlikely that a blockade-running captain in Atlanta would know of these events some several hundred miles away. Most of the Southern newspapers were reliant upon Northern reports, and took care to emphasize that reports of Confederate losses came from Northern-biased sources, and some papers even reported Gettysburg as a success for Lee, such as the Richmond Daily Examiner's 7 July headline proclaimed "Our Army Again Victorious," which it later had to retract. Although the news of casualties from Pennsylvania was notable both in the press and diary accounts from this period, there was little in these accounts to suggest that Southerners collectively saw this battle as a decisive turning point. The survival of Lee's army on the retreat, plus the amount of supplies he managed to forage from his invasion helped to take some of the sting out of the casualty reports. Private Granville Belcher of the 57th Virginia wrote back to his wife that "both sides was whipped" at the battle and that the Confederates only retreated before the Federals did. Emma Holmes in South Carolina would report on 17 July that "Lee has recrossed the Potomac, in admirable order, and the army in splendid trim and spirits without loss." while Judith Brockenbrough McGuire's 15 July entry lamented that:

It is hard to think of so many of our warm-hearted, whole-souled, brave, ardent Southern youths, now sleeping beneath the cold clods of Pennsylvania. We can only hope that the day is not so distant when we may bring their dear bodies back to their native soil.

This is not to say that the failure of the Gettysburg campaign had no impact upon Southern morale, but rather it was part of a string of Southern reverses, the capstone of which in contemporary accounts was not Gettysburg, but the fall of Vicksburg. McGuire's diary entries for July mention the casualty reports from Gettysburg at length, but follow the progress of military affairs in the West with much greater interest. When Mary Chesnut first heard news of Vicksburg's fall, she described it memorably as "I felt as if I had been struck a hard blow o the top of my head, and my heart took one of its queer turns." Georgia Governor Governor Joseph E. Brown's public address on Confederate military reverses on 17 July made reference to both Vicksburg and Port Hudson and Pennsylvania was conspicuous by its absence. In contrast to its initially rosy coverage of Gettysburg, The Examiner 9 July called the fall of the fortress,

is not less astonishing than unpleasant. It is the most unexpected announcement that has been made in this war. So astoundingly contradictory is it to every particle of intelligence lately received from that quarter, either from our own people or from the enemy, that there is a strong disposition to doubt the authenticity of the dispatch sent to the Secretary of War over the signature of General Joseph E. Johnston.

The Examiner's somewhat hyperbolic tone underscores that unlike Gettysburg, the details and purported strategic importance of Vicksburg was something Southerners were much more aware of and its loss was a known quantity.

But news of these collective defeats came at relatively low ebb of Confederate fortunes and an increasingly strained homefront. The Richmond bread riots of Spring 1863 highlighted the increasing collapse of the Southern economy and these tensions were not easing despite victories like Chancellorsville. Chesnut's diary at this point seethed at both war-weariness and lack of patriotic fervor among the populace in this particular period of the war. While this did not necessarily translate into wide-spread defeatism, it was becoming apparent that victory was ever more distant despite news of Confederate victories, real or imagined. European powers seemed no more likely to intervene in 1863 than in 1862 and Northern reserves of manpower appeared to be endless.

What this somewhat dour climate in mid-1863 helped is to cement Gettysburg in the postwar construction of memory. The memory cultures of the postbellum were much more amenable to Lee and his lieutenants than they were for the veterans of the Confederate West and these various officers were able to portray Gettysburg as the high-tide of Confederate fortunes, or settle scores postwar with their compatriots they felt responsible for the defeat. It was, after all, an invasion of Northern territory and this exceptional component of the campaign ironically was one of the reasons many contemporary accounts could write it off as a bloody setback. No Confederate territory had been lost and Lee's army survived, salient facts which matter somewhat less when the ultimate outcome of the war was a known quantity. Coming at the near chronological epicenter of the conflict, the narrative weaved around Gettysburg helped to cement it as a tipping point, especially since the veterans of the Army of the Potomac also enjoyed a privileged position in the hierarchy of postwar memory.

These vagaries of postwar memory construction helped to cement Gettysburg in the American public conscious of the war, of which Gone with the Wind both shaped and was an expression of memory. The reality was that most Confederates in July 1863 did not have such a clear picture and from their perspective, the war situation was in a constant state of flux which was very undefined and whose ultimate meaning was malleable.

Sources

Davis, William C., and James I. Robertson. Virginia at War, 1863. Lexington: University Press of Kentucky, 2009.

_. Virginia at War, 1864. Lexington: University Press of Kentucky, 2009.

Gallagher, Gary W. Lee & His Army in Confederate History. Chapel Hill: University of North Carolina Press, 2001.

Reardon, Carol. Pickett's Charge in History and Memory. Chapel Hill: University of North Carolina Press, 1997.

At Gettysburg, as it happened, in purely military terms? Probably not. In more slippery political and social terms? Possibly.

As a purely military operation, many find its importance to be greatly overstated. Into 1864, Lee was still considered undefeated by the South in spite of Gettysburg, and Lee went back and forth in his weighing of the battle. On the one hand, he submitted his resignation to Davis (which was of course denied), but on the other, he claimed to have achieved many of his objectives in the invasion, and that the Union Army of the Potomac would be "as quiet as a sucking dove" for the next six months. As it happened, the next major battle with Meade was ten months later, they had been so badly bled. In the meantime, Lee had sent his best corps commander, Longstreet, to the west, where he delivered the main attack in the Army of Tennessee's biggest victory of the war at Chickamauga.

Now, dipping into counterfactual territory a little bit, it would have been very difficult for Lee to slay the Army of the Potomac the way he initially planned starting from the first day at Gettysburg. Lee wanted to attack the various corps of the AotP when they were all strung out from forced marches, reacting to his thrust towards Harrisburg (Napoleonic Manoeuvre De Derrière), and destroy the army in detail. Instead, operating without his cavalry, Lee was the one who was caught strung out and had to make an emergency concentration at Gettysburg. So that's out. He did manage to win a great tactical victory the first day, and the second day was a litany of close calls.

The third day is the most controversial; many people see it as a crushing and near inexplicable blunder on Lee's part, other see the hand of capricious chance and failures of subordinates in it. After Jackson's death, Lee reorganized the army from two wings into three corps, and promoted two division commanders out of Jackson's wing to fill the new slots. A.P. Hill and Richard Ewell seem to have found the transition difficult; Lee tended to give Longstreet and Jackson broad objectives, and Jackson would hand them detailed orders. This was their first time operating semi independently as corps commanders.

Edward Porter Alexander, Longstreet's artillery chief, criticized Ewell in his memoir. According to him, Ewell wasn't thinking outside his sector. On the third day, his artillery was in position to fire on the Union center in enfilade, but he missed the opportunity because it wasn't his sector. He also criticized Lee's general approach to the battle. He believed that the best thing for the South to do after their success on the first day was entrench on Seminary Ridge, and dare the Yankees to try to knock them off. He quotes Jackson, saying that while the South sometimes failed to force the North from their positions, the North always failed to force them out. He points to Army Artillery Chief Pendleton's meddling depriving him of ammunition to support the infantry advance, and the switch to slower burning fuses reduced the effectiveness of their artillery shells. If everything went perfectly, the South might have forced Hancock's corps from their position on the third day, but they wouldn't have much to follow it up with. Meade would likely be able to withdraw his army to the prepared Pipe Creek defensive line, blocking Lee from Baltimore and Washington. In purely military terms, what does victory at Gettysburg get Lee? Not a whole lot more than he got. His staff said that even if they'd won, they'd have to retreat, since their supplies were getting thin and PA militia was keeping them from foraging. He couldn't destroy the Army of the Potomac, and he'd still lose a hell of a lot of men.

However, war has a political dimension beyond the armies and the battlefields. There was a strong antiwar faction in the Union, the copperheads, and in 1863, two key states, Pennsylvania and Ohio, were having elections for governor. Governors are responsible for raising regiments of volunteers; the PA governor was tireless in his work, and without him, fighting the war is that much harder. If the Confederates win at Gettysburg, it's another blow to the morale of the Army of the Potomac and the north as a whole; if for nothing else, Gettysburg proved to themselves that they could stand up to the best the South had to throw at them. Lincoln would have to run for reelection next year, and every battle the Union loses counts against him at the polls; good luck getting reelected with a lead army that's never put its foe to flight or really held them back.

So I don't think a Southern victory at Gettysburg could really be a Game Over for the north, but it would mean they'd have to come from behind, or at least really work to reestablish their lead.