I'm not qualified to answer that, but I would say yes from a force perspective. They're already bearing a sizeable piece of the fight in the rank-and-file, or so it would appear.
You've got to realise that raw force is only a part of the equation, too. Raw force needs a sense of direction, and whoever provides that direction needs accurate information on the enemy in order to make sound decisions. I'm getting out of my lane here, but my guess would be that most of the fully qualified command/control and intelligence types were Saddam loyalists and are dead, captured, or found their way to the other side. This of course means a slow, fresh start in the more difficult and time-consuming training processes at the top tier echelons. Also, if you really want to explore the most serious obstacles to rebuilding the upper echelons, look into Arab culture and the tribal psychology. They're just different from westerners..dunno how else to say it.
On the issue of "beans, bullet, blankets and wrenches", or the most sizeable portion of any armed force: the support units: getting the right widget to the right place at the right time takes a highly centralised form of control. For the time being, I have my doubts about their functional supply system.
As for the Iraqi heavy stuff: all their base are belong to us, and all their guns got bent, mostly during GW1. I drove past miles and miles of boneyards somewhere in Kuwait containing nothing but destroyed and captured Iraqi war material. I mean miles and miles literally. Another slow, expensive fresh start. Not that this stuff will prove entirely useful in an anti-insurgent campaign, but it's a consideration should it escalate..also a deterrent to it escalating in the first place.
So..the short answer to your question would be yes, they'll be able to hold their own provided the Iraqi leadership unifies, get's it's act together and focuses on the common goal. If this happens, their soldiers will do their part and get it done.
Keep in mind that these are big-picture issues and I'm not a big-picture kind of guy, so don't take what I'm saying as anything other than my own guess. Besides, I haven't been there since MAR 04 and things have changed considerably.