There is a very fundemental reason that this tactic will not work in the case at hand.
The key component to nation building is first psychologically destroying the people and culture of the object nation. In the three most obviously successful instances of nation building; Japan, Germany, and the C.S.A., this was present in various forms. In the South people were first taught to hate blacks, then taught to hate themselves. In Germany, the people had already been taught to hate Jews, so it was just straight on to self hate for them. In both Germany and the American South evidence of this remains today. Show a german an Iron Cross and watch them cringe. The US beat southrons over the head with slavery until now the average southron will dimly reply, "Comrad, the war was about slavery and the right side one." The Allies beat the germans over the head with the ovens and gas chambers, until the germans actually made it illegal to display any symbol associated with the NAZI party.
The reason nation building won't work in Iraq, is that we cannot destroy the psyche of the Iraqi people without destroying the culture of Islam itself. The culture is to widespread for such an attack.
If nation building is the tactic, then we will fail. Of course, if we are just positioning ourselves for Phase III, then we may be in fine shape afterall.