I wouldn't be discouraged, but I would try to be realistic in your expectations. Maybe think about other programs in the area or around the country that are less competitive, especially since it's so easy to apply using OTCAS (thus 600+ UIC applicants for 2013). The best thing I was told during the application process was to give myself options.
I applied to UIC, Rush, and Midwestern IL with a 3.58 GPA, mediocre GRE stats, plenty of OT observation and post-bac work experience not related to OT. I got into Rush and Midwestern, but was denied at UIC this week. The best advice I can offer is to really work on getting volunteering/observation opportunities (and take notes) in multiple locations, which looks great on your application, will help you write a better, more informed personal essay, and gives you a lot to talk about if you are invited to interview at a school.
GPA isn't everything, as a lot of people have confirmed on other threads. I personally think my essay and life experiences are what made my application stand out. Good luck!