Hopeless is one view, difficult & complex another.
The reality is we are in there and there are, and always were going to be, forces who would set about sabotaging any attempts to mould Iraq into a 'modern' democracy.
The Shia extreme are one such force & they are fuelled by many long years of
oppression. Some remember what happened in 91 when they rose up against the govt.
Sadr is playing his moves carefully. He openly called for an uprising and got one. His motives are many, 1) to deflect from his crime against al-Khoei, 2) to gain a bigger power base among the young and radical (he may even believe he can usurp al-Sistani - an assasination is well within his repetoire of accomplishments but al-Sistani is too important a target for an open plot). I am sure that most of us have seen how al-Sadr cultivates his appearance (when his mouth is shut) to look immpressive & fearsome, just like the most esteemed Shia Ayatollah Ruholla Khomeini.
The problem with a humiliating withdrawal from Iraq at this point is that the world would be a much messier place and nothing would really be resolved. Repubs would still be wanting another go. Iranian revolution would get exported to Iraq & oil once again becomes an economic weapon to pull west's chain with. Actually, Iraq would become the problem it was always going to be, only much earlier than if Saddam had remained a while longer.
We can decry the problems with having gone into Iraq the way (we) did, but the reality is that it has happened & now we are caught into playing the game. Hopefully much more carefully. Sadr has cunningly put himself in Najaf as bait to the US forces. If they go in, then Sadr will have won as it can only lead to a complete breakdown of coalition control in Iraq and also spread the anti-western feeling further. The real trick is to get Sadr out somehow (& that won't be easy). Or to get an agent in there to top him. That may produce a temporary backlash but only from his headless supporters & they are clearly a minority.
The other issue here that is easy to forget is the enmity between the wahabi Sunnis and the Shia. They may form a temporary alliance to tackle a perceived common enemy but it will be mayhem once that common enemy has gone (as happened with Russians in Afghanistan). 1st - together we kill the invaders, then - we slaughter each other !!!.
Doug M
#2 clarify meanings & correct typos)