I guess that depends on whether you're a half-full or half-empty kind of person. On the one hand, it does not appear that we're going to get a stable, U.S.-style republic right from the get-go. However, that was an especially optimitistic goal.
There seems to be a very reasonable chance of a workable constitution - hopefully one based on a regional-style federalism. If the Sunnis give up their Baathist dreams, this will work -- if not, it will likely be folllowed by low-level civil war, policed in part by young Americans.
Better than Saddam? Surely. Better than a crumbling regime under Saddam's sons during an Islamist upswing? Absolutely. But also not a quick and immediate fulfillment of the highest expectations either.
Iraq is now functioning at a higher level in terms of infrastructure than prior to the war. Standards of living are climbing, and things are moving towards stability. The fact that it hasn't happened instantaneously shouldn't be troubling. The fact that it may still collapse should be.
Yes, but mostly because of problems with other Islamist countries recently. If it develops more like Turkey, or even better, structurally like Switzerland in terms of the federalist government, then it shouldn't be a huge cause for worry.