Neither "over the hill" nor "past his prime," as the crowd-pleasing lyrics have it, Dylan in 2007, in full Vincent Price mode.
The fan-shot video is one of the better I've seen, not shaky, complete, and with some great close-ups. Note the (wedding?) band Dylan is wearing on his ring finger, which you can spot when he pulls out his harmonica towards the end of the song. Lots of speculation about that ring, which appeared on Dylan's hand sometime around the 2006 baseball stadium tour.