While I tend to agre with Dowding and Gsholtz opinion on the matter, I think there's something that must be considered in the equation.
Religion.
The terrorists we are used to fight, (RAF, BR, IRA, Basques, or even the original PLO), are mostly political or ethnical based.
Usually some concession in political direction, or some grade of indipendence, will isolate the extremists and win the battle.
With the religion in the equation the thing become more difficult.
A religion is by definition rigid and subject only to slow, century long changes, the twist that the arab terrorism has made towards a war of religion, (even if originally caused by mere economical and political cause) rend the solution quite difficult.
The Osama's plan is quite clear: suck in all the extremists, and eventually, with 9/11, create an opposite almost religious based force in the adversary.
What Bush have in mind is less clear.
Lame excuses apart (WMD, OBL, Free Iraq, and so on), Iraq invasion move can be part of a plan, played on the edge of the blade, to stabilyze the region.
For sure the short term advantage is the *cough* oil

The long term is the possibility to have a strong democracy, a good example (not of the "we will kick you a**" kind) of coexistence of western-like government with that type of religion.
If CIA have the humility to inform Bush (or the future CIC) of the difference between a southern American republic with a Middle East state.

But IMHO there are other moves to take, out of Iraq, 2 big moves of wich I have'nt yet seen traces:
1) Apply pressure on Israel to stop the slow colonization out of official borders and the practical apharteid of not jew religion citizens;
2) Impose a less aggressive stance by the economical forces (multinational companies) toward muslim countries, that (percieved) aggression, using basicly the dollar and a strong cultural colonization, is one of the stronger recruiting advertising for the extremists.
But theese 2 powers (pro-Israel and economic lobbies) are too strong even for an almost "full powers leader" like your presidential institution.