gandalf: I’d have to think about #1 before answering.
On #2: What do you think the Arab world would have done if the US occupied the country of Mecca and Medina? Hol-ee cow! I can only imagine the repercussions if that had happened.
On #3: Good question. I think our willingness to engage them diplomatically at this point is both good and bad. Good in that it signals to the people of Iran that we are not intransigent and are willing to give negotiation a shot. Bad in that signals to the hardliners of that country that the US is willing to parlay in spite of our abhorrence of that regime. I cannot help but think that I-Am-A-Dinner-Jacket and his cohort are laughing their asses off at us right now. This must be perceived as a show of weakness and it exposes Bush as a true lame duck who is ideologically adrift even within his own party.
I would throw a #1 back at you: What does the changed state of the war in Iraq do as far as the landscape and politics of the region go? I have two friends in country in Iraq, one is a Major and the other a LTC. Both report how quiet things are, the markedly changed mood among US soldiers, Iraqi soldiers and police and the populace at large. Both of them are discussing the war in terms of it being won and both of them were discussing the war as a potential lost cause as little as a year ago.