Lew Rockwell wrote an interesting piece on the nature of Saddam's regime. He argues that Saddam had very carefully and sometimes brutally woven together a country in which groups of people really hated one another. Iraqis lack a common ideology so the Bushite idea of implementing a new state by killing Saddam and holding elections falls far short. Rockwell's solution is much cheaper in blood and treasure and comes from the Iraqi people themselves.
So what should happen? The US should abandon Baghdad. It should, in effect, allow the country to "fall apart" in the same way that Gorbachev let his empire dissolve. Iraq would split into many states, some of them noncontiguous. Governing units of all shapes and sizes would appear. The main reason for the ghastly killing – fear of the rule by one group over another – would vanish. Here is the highest hope for peace in Iraq.
So long as the US insists that Iraq be a single nation under one government, it will inspire chaos and killing. Bush was wrong, but in a way that is usually not understood. His mistake was not in overthrowing the state but in hoping to create and control a new one.