But that is the thing, LK--it was this very threat that had resulted in the Holy League assembling in the first place. A victory in this war will likely see the usual Italian clusterfudge of backbiting and backstabbing in the immediate future--but they're still likely to try it again in the near future if the Turks are a near threat, and once again, without a strong defeat, the Turks will stick with what they imagine works. A "Lepanto" may not be inevitable, but it's pretty damn likely.
I'm afraid we have to disagree completely. The battle of Preveza of 1538 (the only time that Spain sent naval forces to the Greek coast prior to Lepanto) had already cast a pall on the relations between Spain and Venice. Once again the Holy League had been organized - with a lot of efforts - by a pope (Paul III), the largest contingents were from Spain and Venice and a Doria (Andrea, the uncle of the Gianandrea who fought at Lepanto) was in overall command. The numerical advantage of the Holy League fleet was denied by lack of wind and the more aggressive tactics of Hayreddin Barbarossa brought an Ottoman advantage by the close of the first day of fight. The second day (although the wind had come back) Andrea Doria refused to press the action and retreated. In 1539 Barbarossa could devastate with impunity the Italian and Dalmatian coast: the fleets of the League did not materialize. In 1540 Venice sued for peace. Do you think that the Serenissima had forgotten Preveza?? The sluggish mustering of the Spanish contingent, the delaying tactics of another Doria and the futility of prosecuting a war which appeared already lost (Famagusta had already fallen by the time of the mustering of the fleet at Corfu) brought the League ships in front of Lepanto at the very close of the campaigning season in the Mediterranean (and if Don John of Austria had not been in overall command they would never have gotten there). If there is no battle in October 1571, that's the end of the League: Philip II will hoard his ships and his soldiers and Venice will again sue for peace.
I'd argue that ultimately it's not the naval defeat that leads to an Ottoman naval decline--or rather, it's not the primary cause--it's the lengthy war with Persia diverting funds and attention. That, and the utter disaster that was Murad III's government. Philip II's Spain faced similar problems on NUMEROUS occasions, and yet despite what people frequently think, Spanish naval power bounced back.
That's true, but it does not tell all the story. The follow up of Preveza (and the influence of Barbarossa) had brought the central and western Mediterranean under the gaze of Suleiman in his perpetual fight against Charles V. Tripoli was taken from the Knights of Malta, the fleet of the Holy League mark II was defeated at Djerba in 1560 and finally there was the great siege of Malta in 1565: this time the attack failed even if Spain was not in the position to send a relieving fleet so soon after Djerba. The death of Suleian and the ascension of Murad III changed the strategic focus, reducing the weight of the sea party (Cyprus was not really a naval operation, and the command was given to Lala Kara Mustafa Pasha rather than to the Kapudan-i-Darieh). With the war against Persia again coming to the front Muezzinzadeh Pasha needs a victory to keep the fleet in the focus of the new Sultan's attention.
No argument here--I'm as opposed to seeing the post-Suleyman Ottomans as a spent force as you are. While I'd argue they were facing difficulties, they were hardly insurmountable (or for that matter that many of them weren't ultimately surmounted)--hell, the reason I mention them facing these problems under Suleyman is to fight the equally false myth of "Suleyman I, the Perfect Sultan."
The reasons for the slow decline and the ultimate downfall of the OE have been discussed for centuries in Europe (and obviously in Constantinople too, but with a lot of caution

). There have been no real consensus, and there have been no consensus also on the ways and means to stop the decline and regenerate the empire. My 2 cents are that from Mehmet the Conqueror to the death of Suleiman the Ottomans were quite open to innovations (within limits), in particular to progress in war techniques and tactics. With the death of Suleiman this (relative) openness to innovation stops, or at least slows down to a glacial pace. The power centralization also increases and there are a lot of established players in the game who tend to work more to maintain the status quo rather than open the door to changes which may well diminish their influence.