Why not take the Kurds, Isralies, Irish, Slavs et al and put them all in one country, call it ethnikostan, then let them sort themselves out? (Before you all attack me, it's an onion)
In all seriousness, Iraq isn't the most fantastic place to practice religion, but then neither is the deep south of america or Israel. Right now the situation in Iraq is one of controlled civil war. "controlled" in that we don't have guys openly digging trenches or bombarding eachother with rockets out in the open and fighting it like a conventional war, instead we see a guerrilla war against "american Oppressors" of the Iraqis.
I think one think that should be taken into account is that if you try and give freedom to a beaten people, those people will often fluster and try to get back under an oppressor, OR they will consider everyone an oppressor and fight everything.