Elaboration: Walt says that if China were to establish a secure sphere of influence in its region, that would free up China to devote more attention to the stirring up of trouble in the western hemisphere. It could forge closer ties with countries in the U.S. backyard and ratchet up tensions. Remember the Soviet missiles in Cuba. Etc. I'm not convinced by this notion that the U.S. must prevent any other great power from achieving a regional sphere of influence. (Walt reaches back for authority to Kennan's American Diplomacy but a more recent statement of this view is in Mearsheimer's The Tragedy of Great Power Politics.)
In my view, this is the most misleading paragraph in Walt's post:
The problem with this analysis is that Nazi Germany and imperial Japan were not just seeking "to establish regional hegemony in a key area"; they were expanding by military aggression and conquering and occupying other sovereign states. Nazi domination of Europe was unacceptable not only on strategic but also on moral grounds. Until someone comes up with a more detailed, convincing scenario about how a Chinese sphere of influence or regional hegemony threatens the U.S., I will remain skeptical.
... this logic reflects the realist view that it is to U.S. advantage to keep Eurasia divided among many separate powers, and to help prevent any single power from establishing the same sort of regional hegemony that the United States has long enjoyed in the Western hemisphere. That is why the United States eventually entered World War I (to prevent a German victory), and it is why Roosevelt began preparing the nation for war in the late 1930s and entered with enthusiasm after Pearl Harbor. In each case, powerful countries were threatening to establish regional hegemony in a key area, and so the United States joined with others to prevent this.
However, I will concede this much to Walt's view: intentions are difficult to read precisely and there is a case for hedging bets by maintaining U.S. alliances with South Korea, Japan, the Philippines, and other countries in the region. But does the U.S. need to send Marines to northern Australia? Does it need to sell advanced F-16 jets to Indonesia? For that matter, does it need as many as 28,500 soldiers in South Korea?
Views that emphasize a "contest" between the U.S. and China (see e.g. W.R. Mead's recent post) can be self-fulfilling prophecies, as Walt himself acknowledges in passing. In the lingo of contemporary bureaucratic diplomat-ese, this is unhelpful.