By all accounts I have heard he's quite a talented engineer. I doubt that recruiters are all so daft to equate losing a phone to incompetent engineer. It was only huge news because of Apple's historic success at keeping secrets--if he did the same thing while working for Google it would have stayed to a few tech blogs and the world continue on oblivious.
Look at it this way: he's the only employee you're likely to hire to truly understands the feeling you get when you think Steve Jobs is going ensure you never work in the valley again.
Sure, he lost a valuable prototype, and the entire world got to see it before Steve Jobs unveiled it, ruining Apple's legendary cloak of secrecy, but you know that he's one of few people in the world who will never, ever make that mistake again.
You think?
(recruiter reads resume) "Oh, yeah, you're the guy who lost the iPhone prototype! I can't wait to hire you!" :-)