So a few things are going on (or, rather auspiciously, not going on) in Iraq that are worth mentioning.
Mention the first: Elections are coming! Parliament has given the thumbs-up to a key election law which will bring a re-shuffling of parliament and local leaders. If all goes to plan, the Kurds and Sunnis will have higher representation and slightly more autonomy, which should cool some serious worries by Sunnis and Kurds about Shiite domination. The one downside is that little is likely to get done if elections become proportional.
Mention the second: Anbar is being handed over slightly more quietly than expected. While there are some ethnic tensions and apparent abuse by Shiite police/military upon the Awakening Councils (likely in an effort to try to assert central government authority in the region), the Awakening Councils exist precisely to buy into the national system. They are likely to try to use the system itself to state their grievances, and compromise with the central government as the handover process becomes more complete.
Mention the third: Casualty rates continue to drop. Below, I've made some graphs from icasualties.org data of casualties since the start of the Surge:
In the first, we see that civilian monthly deaths are down by over an order of magnitude since the beginning of the surge, and are continuing to decline despite the fact that the Surge ended in July and most of the Surge troops went home. This is an early indication that the rate of decrease in violence is now relatively independent of numbers of American troops. This could be for a number of reasons: increased effectiveness of the Iraqi army/police (probably a big reason, in reality), political reconciliation and increased economic growth, increased civil services (like trash collection and water delivery), and a "positive spiral" of security (where now-secure people stop funding militant groups that are promising local security, thus weakening the very same militant groups that are decreasing security for others). But it's a very good sign, seeing as the Iraqis are kicking us out by 2011--we should well be able to go home and leave a very stable and prosperous Iraq; and with the election laws in place, it will even be a functional (if somewhat flawed) democracy. This would constitute a win (if an expensive one) by almost any standards.
This second graph only includes coalition casualties to make them easier to see. Deaths and wounds are both down dramatically, but wounds are decreasing much faster than deaths--in fact, in September (so far, I suppose) there have only been 40 wounds but 20 deaths, meaning that every other soldier wounded also died. In February 2007, it was only 85 out of 520, less than 1/5 of all wounded. This indicates a few things:
1) Violence is dropping faster than it appears from the most obvious metric, which is coalition deaths.
2) Attacks on Coalition troops are fewer, but more deadly, which is likely due to the fact that Coalition troops are fighting Al-Qaeda militants in higher and higher proportion--their attacks are likely more targeted and deadly than a quick squabble with sectarian militants.
I need to look more into the actual development of the Iraqi Army to be sure about the stability or this security progress, but I'll get to that later.