The Republic led Sweden 1-0 at the Aviva Stadium on Friday night courtesy of Robbie Keane's 60th international goal as they went in search of the win they needed to take a significant step toward next summer's finals in Brazil.
But inside 24 minutes either side of half-time, their dream was torn apart as the Swedes levelled through Johan Elmander and then claimed victory as veteran midfielder Anders Svensson struck a dagger blow to Irish hearts.
Ireland now head for Austria on Tuesday night knowing even a win there might not be enough to rescue their hopes, and wondering what might have been.
Central defender O'Shea said: "It's frustrating. The tempo we started off at was going to be hard to maintain for the 90 minutes, but when we started so well and we got a great goal, if we could have just got to half-time at 1-0, it would have been such a massive carrot to hang on to.
"But credit to them, they put a great ball in and Elmander got across and buried it well.
"But that's where we need to be professional enough to kill teams off, especially from that first half point of view when we got the goal.
"We have to keep possession that bit better, and then especially in the second half to show a bit more imagination to get that equalising goal after they went 2-1 up.
"That's something we need to improve on and hopefully we can salvage something on Tuesday night against Austria, and who knows where that will take us."
The Republic's latest capitulation in Dublin - they were trounced 6-1 by Group C leaders Germany in October last year and conceded an injury time equaliser to the Austrians in March - did not go down well with a sizeable proportion of a bumper home crowd, a reaction which heaped pressure on manager Giovanni Trapattoni.
O'Shea said: "When we lose against a team we feel we should be able to beat, at home especially - and we played so well over there to get a 0-0 and we were disappointed not to have won the game - of course everyone is going to be disappointed.
"But we can dust ourselves down for Tuesday. If we can win over there with Germany beating Austria, it's a knockout situation on Tuesday night and if we can salvage the win, who knows what might happen.
"Unfortunately, it's not in our hands, but if we can beat Austria on Tuesday night, it's basically a knockout situation - they knock us out if they beat us and likewise, if we beat them, there's no chance of them qualifying, so let's wait and see."