Al-Sadr and top lieutenants are now in Iran. Still talking of a comeback, they are facing major obstacles, including a loss of support among a Shiite population weary of war and no longer as terrified of Sunni extremists as they were two years ago.

Despite the favorable signs, U.S. commanders are leery of proclaiming victory or promising that the calm will last.

The premature declaration by the Bush administration of "Mission Accomplished" in May 2003 convinced commanders that the best public relations strategy is to promise little, and couple all good news with the warning that "security is fragile" and that the improvements, while encouraging, are "not irreversible."

Iraq still faces a mountain of problems: sectarian rivalries, power struggles within the Sunni and Shiite communities, Kurdish-Arab tensions, corruption. Any one of those could rekindle widespread fighting.

But the underlying dynamics in Iraqi society that blew up the U.S. military's hopes for an early exit, shortly after the fall of Baghdad in April 2003, have changed in important ways in recent months.

Systematic sectarian killings have all but ended in the capital, in large part because of tight security and a strategy of walling off neighborhoods purged of minorities in 2006.

That has helped establish a sense of normalcy in the streets of the capital. People are expressing a new confidence in their own security forces, which in turn are exhibiting a newfound assertiveness with the insurgency largely in retreat.

Statistics show violence at a four-year low. The monthly American death toll appears to be at its lowest of the war — four killed in action so far this month as of Friday, compared with 66 in July a year ago. From a daily average of 160 insurgent attacks in July 2007, the average has plummeted to about two dozen a day this month. On Wednesday the nationwide total was 13.

Beyond that, there is something in the air in Iraq this summer.

In Baghdad, parks are filled every weekend with families playing and picnicking with their children. That was unthinkable only a year ago, when the first, barely visible signs of a turnaround emerged.

Now a moment has arrived for the Iraqis to try to take those positive threads and weave them into a lasting stability.

The questions facing both Americans and Iraqis are: What kinds of help will the country need from the U.S. military, and for how long? The questions will take on greater importance as the U.S. presidential election nears, with one candidate pledging a troop withdrawal and the other insisting on staying.