Come to think of it, why is Indiana so red to begin with?
In the 19th century, Indiana was a swing state. There were a lot of Southerners who settled in Southern Indiana and Illinois, but there were less northern Indianans to balance it out than Illinois. This is why Indiana and New York have the most VPs, because they were highly prized swing states. It then narrowly but firmly went for the GOP under McKinley, and continued that way except for in 1912 and the 1930s. In the 1940s, it went to the GOP, but by a frog's hair. It was really after Eisenhower that Indiana became solidly red.
Today, I think it boils down to the fact that Indianapolis is too small to balance out the rural and suburban GOP voters (ex. Illinois has Chicago, Ohio has Cleveland, Cincinnati, and Columbus). Now that it's a right-to-work state, it's basically going to get even harder for the Democrats to win (look at Oklahoma before and after 2002) elections there. You might be able to lump it in with the Dakotas (really break hard for the GOP, but by a frog's hair if the Democrat does well enough).
So sort of a transformation, (relatively) akin to Virginia's?
Yeah, and North Carolina. This is happening in South Carolina as well actually, but to a lesser extent (kind of like Indiana in 2008, though I think there's a higher chance of South Carolina becoming regularly competitive than Indiana). The whole Atlantic South is basically becoming purple. This transformation towards the Democrats might also be masked because of Obama's race, but blacks are more crucial voters here, so we'll see if the drop-off in black enthusiasm towards a white candidate is greater than possible prejudice towards the President. As of now, Obama has a net positive approval rating in South Carolina (46% or so, two points better than his 2012 result). Things could definitely shift in this zone.