But these early hopes have been dashed by the constant attacks that have taken 287 American lives, including 70 combat deaths since President Bush declared an end to major combat operations on May 1.
Mr. Bush, who will discussing Iraq and the terrorism fight in a nationally televised address from the White House on Sunday night, will ask for more sacrifice from the American people.
CBS News Correspondent Martha Teichner reports on what went wrong.
Laith Kubba, worked with 200 professional Iraqi exiles for a year to devise a State Department plan to rebuild Iraq ahead of the invasion. He says their plan was shelved when the Defense Department took control of reconstruction away from the State Department just before the war started.
Kubba says he cannot believe the plans he and his fellow exiles devised were ignored. "I'm just puzzled," he says. The Iraqis expected the United States to take charge and have a plan when they arrived, but with the first week "they realized that there is nobody in charge," he says.
Instead of moving in immediately and taking control, the United States stood by while government offices were systematically trashed.
Kubba says, "We had all the ministries that had all the records on everybody and by seizing those ministries we would have had the keys to running Iraq. We should have kept and called upon all the people in the bureaucracies to report back to work from day one because those people are accustomed to order."
Instead of order, Iraq swirled into chaos.
The Defense Department had predicted that by now the Iraqi would be well on their way to self- government, and troop levels would be down to 30,000. Instead, America still has 140,000 in place. It's costing the United States a billion dollars a week to keep them there. The number of soldiers who have died since the end of hostilities is now higher than the number killed during the fighting, and every day it seems the number goes up.
On August 19, a car bomb killed 23 people at the United Nations' Baghdad headquarters.
A week later, the moderate cleric Ayatollah Mohammed Bakr al Hakim was blown to bits along with at least 84 others outside the main Shiite mosque in Najaf, minutes after begging worshippers to cooperate with U.S. forces.
The United States won the war, but Iraqis blame America for failing to bring peace.
James Dobbins, who supervised U.S. reconstruction efforts in Afghanistan, Kosovo, Bosnia, Haiti, and Somalia, has co-authored a new study released by the Rand Corporation, reviewing 70 years of America's efforts at nation building.
Dobbins says inadequate resources is biggest reason the nation-building effort in Iraq is going poorly.
"All the evidence suggests that there is an inverse relationship between the number of troops you commit to an operation like this and the number of casualties you sustain," he says, meaning the more troops, the fewer casualties.
The Rand study says history shows 20 troops per 1000 residents are required to maintain stability. Iraq's population is 25 million, so that works out to roughly three times the number of security forces in place there now.
"Some people are saying, we don't need more troops, we just need different types of troops. Another strain is saying, no, we don't need more American troops, we need more multinational troops," says Dobbins. "We need more of all of them, and in combination we need to reach a figure close to 500,000."
But the United States doesn't have more troops. In a report released Wednesday, the Congressional Budget office says the United States can't even sustain its current numbers in Iraq past March without jeopardizing other operations like Afghanistan or Bosnia.
John Hamre, a former comptroller of the Defense Department, was handpicked by Donald Rumsfeld to tour Iraq just a few weeks ago. But Rumsfeld can't be happy with the stories Hamre and his team brought back of organized crime and what he called "industrial strength" looting.
"I have never seen more strain in the military," says Hamre. "The emotional strain is very difficult."
"There's been so much copper plundered from the electrical system that it's depressed the price of copper throughout the Middle East," he continues. "I was told when I was in Iraq, 200,000 barrels of day of oil are still being stolen in the black market."
Oil revenues, which the Bush administration was counting on the pay for Iraq's reconstruction, will only be 40% of what the administration had counted on for the foreseeable future.
But there is good news, according to Paul Bremer, the U.S. administrator in charge of Iraq's provisional government, such as nearly 40,000 new Iraqi police, and a battalion of the newly formed Iraqi army in training.
But Bremmer is running out of money and time.
"What we have today is ideally what Osama bin Laden would like to see, and that is Iraq, at the heart of the Middle East, an important Muslim country, in chaos," says Kubba. Kubba considers this ominous new dimension to the Iraq equation a disturbing wake-up call to President Bush.
"I think the challenge he is facing is really beyond hima and I think too big even for America to handle on its own," he says.
Bush apparently came to the same conclusion. This past week, on his first day back from vacation, he signaled that he would be asking for an additional $60 to $80 billion to pay for Iraq, double the amount Congress was expecting.
And after snubbing the U.N., the Bush administration now finds itself back before the Security Council, hat in hand. The United States is seeking a resolution that would put a large multinational peacekeeping force on the ground in Iraq under U.S. command.
With France and Germany still stewing in their residual ill will toward the United States, getting the resolution passed will be tricky. So far, neither country has been willing to commit troops as long as the United States remains in charge.
If, in the end, the Security Council agrees, it will be recognition of the urgency of the situation in Iraq -- and how very much is at stake.
Dobbins warns, "The longer it deteriorates, the more difficult it becomes to reverse, and the more expensive it becomes to reverse. and I think one would have to say the security situation, on balance is continuing to deteriorate..."
"There is a narrow window, and the window is closing," adds Hamre. "I think that we're talking months."
"If America succeeds in Iraq, it will be a huge turning point, a triumphant turning point to America, not only in the region, but in the world. If America fails in Iraq, that means Osama bin Laden and others have won, and America will be on the retreat," concludes Kubba.