Does Osama's death signify victory?

No. As Raymond Ibrahim explains, the West is fighting a hydra.

As we ponder the significance of Osama bin Laden's death, it is well to reflect that Islamists are not the cause of hostilities; they are but symptoms of a much greater cause. Individually killing them off—which is nice—is like a doctor temporarily treating a sick patient's symptoms without eliminating the cause of sickness. Ayman al-Zawahiri, now al-Qaeda's de facto leader, once summarized this phenomenon well. Asked in an interview about the status of bin Laden and the Taliban's Mullah Omar, he confidently replied:

Jihad in the path of Allah is greater than any individual or organization. It is a struggle between Truth and Falsehood, until Allah Almighty inherits the earth and those who live in it. Mullah Muhammad Omar and Sheikh Osama bin Laden — may Allah protect them from all evil — are merely two soldiers of Islam in the journey of jihad, while the struggle between Truth [Islam] and Falsehood [non-Islam] transcends time (The Al Qaeda Reader, p.182).

Believing that the death of any individual Islamist leader—who is seen as a "martyr" living in eternal bliss—will somehow be a devastating blow to Islamists is no less erroneous than thinking the death of any individual American president will be a devastating blow to the American way of life.

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The West would therefore do well to take a lesson from Hercules's legendary encounter with the multi-headed Hydra-monster. Every time the mythical strongman lopped off one of its serpentine heads, two new ones grew in its stead. To slay the beast once and for all, Hercules had to cauterize the stumps with fire, thereby preventing any more heads from sprouting out.

Using fire either means using overwhelming force, or turning to God as the Crusaders did when they first took Jerusalem.

Related link: Bin Laden and the Eternal Hydra of War ~ Raymond Ibrahim