He shouldn't be damaged mentally. If anything he would have been damaged after he actually got knocked out, but he came out last time and gave a mighty valiant effort and almost found himself as the winner.
168 is in a bit of a transitional phase with Calzaghe moving up to bigger and better things it would seem. So the division is pretty much wide open with a huge crop of young, talented fighters and Taylor is definitely in the thick of that discussion, if not the front runner to become the next champion.
He's taken A LOT of licks both in the ring and in the press at middleweight, so the opportunity to make a new beginning of sorts at super middleweight is something that Taylor will most likely make the most of. He'll be around for a while in a division that probably suits him better then 160.
I wouldn't be to pessimistic if I were a Taylor fan, there is no reason to think that he won't do at 168 what he did at 160.
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