Just because every attack on civilians or American soldiers is scapegoated on Al-Qaida doesn't mean that "Al-Qaida" actually exists in Iraq. In fact, there is no such thing as an organized network called Al-Qaida.
118 Americans/Brits perished in Iraq this month, pretty clear who's winning. 10 more and this month is the bloodiest for "coalition" forces since November 2004.
All the 3,000,000 Iraqi refugees who are now living in the filth and poverty of refugee camps are not going to breed "freedom loving" children. In fact, they will be able to keep the insurgency going for a couple of centuries.
The only way to win a guerilla war is through ethic or religious cleansing, that's something history has proven time after time again. No matter how many insurgents you kill, they will keep coming back.