Ok danielk, then in answer to your question about what to do about it.
My answer would be almost nothing at present. The characters who caused this disaster are still around. Bush will go soon and the incoming POTUS may be more acceptable to Islamists of the more but not most fundamental persuasion. Blair is a peace keeping envoy in the Middle East. To me thats like trying to pacify a tanker full of petrol with incendiary bullets. Until he and his previous UK regime go I cannot see much progress there either.
In situ terrorist groups are almost impossible to dislodge without either concessions (impossible in the present political climate) or by convincing the indigenous people that they are better off without the terrorists. All we can do is hang in to provide Iraq with some sort of stability while we learn an awful lot more about what the Iraqis want. And if it is a religious society with all the crap that comes with it, enable them to do so. I envisage this taking at least a couple of generations.