Well, obviously it's dishonest. As to whether it crosses a line, I dunno. I can't recall any ads offhand that are more BRAZENLY dishonest (except for maybe Liddy Dole's ad in 2008 where she faked her opponent's voice saying "There is no god.") But in general, dishonest ads are par for the course. I'm somewhat surprised that Mitt Romney would run this; not because I think he's above negative campaigning, but because it's difficult to maintain plausible deniability and say with a straight face that you're just presenting the facts when it's so blatantly false.
With that said, it's really not that big of a deal. There will be more dishonest ads from both the Obama and Romney campaigns in the general election; they'll just get better at making them dishonest in a way where they can pretend they aren't dishonest.