"The relationship has been moving in a good direction for a number of years now and I think tonight does mark a new phase," Rice said following a traditional Muslim dinner the evening meal that breaks the day's fast observed during the holy month of Ramadan at Gadhafi's official Bab el-Azizia residence. It is the same compound hit by U.S. airstrikes in 1986 in retaliation for a deadly Libyan-linked terrorist attack in Germany. The attack killed Gadhafi's baby daughter.
"We did talk about learning from the lessons of the past," Rice said. "We talked about the importance of moving forward. The United States, I've said many times, doesn't have any permanent enemies."
Rice is the highest-ranking American official to visit Libya in a half-century. The United States considers Gadhafi rehabilitated since the days when President Reagan called him the "mad dog of the Middle East," because of the Libyan's surprise decision in 2003 to renounce terrorism and give up weapons of mass destruction. His government has also agreed to resolve legal claims from the bombing of Pan Am Flight 103 and other alleged terror attacks that bore Libyan fingerprints.
"Libya has changed, American has changed, the world has changed," Foreign Minister Abdel-Rahman Shalgam said following a meeting with Rice. "Forget the past."
Gadhafi welcomed Rice in a room redolent of incense. Wearing flowing white robes, his trademark fez and a green pin of Africa, Gadhafi bowed slightly and put his right hand over his heart in a traditional Arab greeting. The two did not shake hands, but Gadhafi did shake the hands of Rice's male aides.
They then exchanged pleasantries, with Rice offering Gadhafi greetings from President Bush and Gadhafi asking about the hurricanes that have hit or are headed to the U.S. mainland, before dozens of reporters, photographers and television cameramen were ushered out.
Their small talk belied almost 30 years of dismal U.S.-Libyan relations that hit their low point in the 1980s when Reagan ordered the retaliatory airstrike and Gadhafi swore revenge.
"We're off to a good start," Rice said later. "It is only a start, but I think, after many, many years, it's a very good thing that the United States and Libya are establishing a way forward."
Will Rice's landmark visit to Libya have implications elsewhere?
"Clearly the leaders in Pyongyang and Tehran have watched Tripoli and Washington close the gaps on their once significant differences," says. "It raises the question of whether similar trips to Pyongyang and Tehran would make outstanding problems easier to solve than they proved to be with Tripoli."
The United States withdrew its ambassador from Libya in 1972 after Gadhafi renounced agreements with the West and vilified the United States in speeches and public statements. Washington cut off diplomatic relations with Libya after a mob sacked and burned the American Embassy in 1979.
The notoriously secretive Gadhafi was to host Rice at but the venue remained mysterious and U.S. officials could say only that they expected it to be in a tent.
Gadhafi is known for often unpredictable behavior and has cultivated images as both an Arab potentate and African monarch since taking power in a 1969 coup. In a televised address to the nation this week he said he considers the United States neither a friend nor an enemy.
In an interview with Al-Jazeera television last year, Gadhafi spoke of Rice in most unusual terms, calling her "Leezza" and suggesting that she actually runs the Arab world with which he has had severe differences in the past.
"I support my darling black African woman," he said. "I admire and am very proud of the way she leans back and gives orders to the Arab leaders. ... Leezza, Leezza, Leezza. ... I love her very much. I admire her, and I'm proud of her, because she's a black woman of African origin."
Rice is the first secretary of state to visit Libya since John Foster Dulles in 1953 and the highest-ranking U.S. official to visit since then-Vice President Richard Nixon in 1957.
Libya has agreed to pay compensation to the families of victims of the 1988 Pan Am bombing over Lockerbie, Scotland, and those of a 1986 attack on a disco in Berlin. The disco attack killed two U.S. servicemen and drew Reagan's order to attack Libyan targets, including Gadhafi's residence.
Rice was spending only a few hours in Tripoli, an ancient city fronting the Mediterranean Sea and backing to the North African desert but took time to visit the offices that serve as the U.S. Embassy in Libya.
Plans to send a full-fledged ambassador and build a new embassy are hung up in Congress over concern that Libya has not fulfilled its promises to compensate terror victims.
Rice's visit comes amid a surge in interest from U.S. companies, particularly in the energy sector, to do business in Libya, where European companies have had much greater access in recent years. Libya's proven oil reserves are the ninth largest in the world, close to 39 billion barrels, and vast areas remain unexplored for new deposits.
Rice said she raised the case of a prominent Libyan dissident who remains detained, and said she discussed other human rights concerns "respectfully." Shalgam defended Libya's record.