The clashes, which broke out barely an hour after the government allowed Internet connections to resume, have added a new twist to the drama that has gripped the Arab world’s largest country: Has the army been on the side of the government after all? ~Time 
Yes, of course it has. It remained “neutral” because that helped Mubarak and his allies play for time, and it gave Mubarak the chance to try to hide behind the military’s popularity. Apparently there are quite a few people who bought into the idea that the army, which is the foundation of the regime, wasn’t actually part of the regime. Instead of focusing on the silliness of the question quoted above, I would point everyone to Roberty Springborg’s grim, but basically accurate assessment  of where things stand now:
The threat to the military’s control of the Egyptian political system is passing. Millions of demonstrators in the street have not broken the chain of command over which President Mubarak presides. Paradoxically the popular uprising has even ensured that the presidential succession will not only be engineered by the military, but that an officer will succeed Mubarak. The only possible civilian candidate, Gamal Mubarak, has been chased into exile, thereby clearing the path for the new Vice President, General Omar Suleiman. The military high command, which under no circumstances would submit to rule by civilians rooted in a representative system, can now breathe much more easily than a few days ago. It can neutralize any further political pressure from below by organizing Husni Mubarak’s exile, but that may well be unnecessary.
The military has not directly participated in the crackdown, which preserves the appearance that the military was not involved in attacking the protesters and keeps the military from being split, but it has stood by while Mubarak’s goons target the protesters. As the new cabinet is filled with figures representing the interests of the military, this ought to have been clear to all a few days ago. If Mubarak is on the way out after the next election, Suleiman will be taking over for him. In Tunisia the uprising prompted a “soft” coup against Ben Ali, and Ben Ali could not stay so long as the military was unwilling to use force to defend his hold on power. As quite a few people expected earlier this month, the alignment of interests between the military and Mubarak mattered more than the outrage and persistence of the protesters. Instead of a “soft” coup approved by the military, there won’t be any sort of coup, but an organized (though perhaps not all that “orderly”) transition from one military-backed strongman to another.
I’m not sure that this means that the “historic opportunity to have a democratic Egypt led by those with whom the U.S., Europe and even Israel could do business, will have been lost, maybe forever.” That assumes a great many things about what would have followed. It could also be that Egypt has avoided even more destructive political upheaval and massive suffering.