If the terrorists are thinking this way, they have yet to address the impact of their increasing use of Vehicle Borne Improvised Explosive Devices (VBIEDS), which have led to a decline in their popular support due to the very large number of civilian casualties. The terrorists don't seem to be deliberately targeting Sunni Arabs, but between probable premature or delayed detonations, and improved security measures by both Iraqi and US forces, the net result has been a lot of civilian casualties. To most Iraqis, the Iraqi police and soldiers are now seen as the good guys, and the terrorists as the bad guys. The Americans are a bunch of foreigners who help out the good guys and give out candy to the kids.
Since the April 2nd mass attack on Abu Ghraib prison, there has been a slight (about 10 percent) increase in the number of daily attacks. There is some evidence to suggest that the terrorist leadership believes the Abu Ghraib operation was a success, which is completely opposite the conclusions reached by the Iraqi and US commanders. Different metrics are likely involved here; the Iraqi and American forces are thinking in terms of conventional winning and losing, and have concluded they "won" because the Insurgents took heavy casualties and did not liberate any of the prisoners, while the Insurgents may be thinking in terms of the effect their ability to make a mass attack may have on their image among the Sunni minority in Iraq.
In Western Iraq, the Americans are passing more bullets than chocolates. This part of Iraq has long been the "wild west." It is a sparsely populated desert occupied by smugglers and criminals. Even during Saddam's rule, the government controlled little beyond the main roads into Syria and Jordan, and some of the towns. But not all of the towns. That much has not changed, until now. For the last two years, coalition commandoes have ranged over the area, controlling the ground they stood on, but leaving the usual chaos in their wake. Smuggling gangs rule this part of Iraq, and since 2003, terrorists have set up shop as well. The tribes along the border controlled the smuggling, and have not responded well to government attempts to shut down the movement of weapons and terrorists from Syria. American and Iraqi troops are taking on the gangs one town and isolated compound (which look like little fortresses, which they are) at a time. The gangs have come back with multiple truck bomb attacks on American bases. So far, these attacks have failed, but more spectacular fighting can be expected out there on the frontier.
The "kidnapping crises" in Madain turned out to be a case of hysteria, media opportunism and government incompetence. There was some tension in the town between Sunnis and Shia, and someone called a relative in Baghdad to complain about it. One thing led to another, and the next thing you knew the town was surrounded by troops and reporters. But there was no there there. Welcome to Iraq, Jack.