If we want to merely extract information, torturing a person's family might be useful but it is a tactic that Saddam used frequently and it inspired not just fear but also hatred and rightly so.
I would line up a suspect's family and ask them what Saddam would do to his family in order to get information--after he answered I would tell him that the people of the USA are not barbarians--that we do not torture and kill innocent people to achieve our goals--that we believe it is immoral to do so--I would then ask them if they wanted to continue to live by Saddam's rules or if they were willing to accept mercy for their family in exchange for cooperation--I guarantee that we'd not only get a lot of information but we'd also get a lot of positive responses from the Iraqi people.
Where there is hatred, sow love...that doesn't mean be a naive idiot...it can also mean display strength but see the big picture and be prepared to exhibit mercy...kindness need not be viewed as a weakness if the person wielding it uses it wisely.
Your concept will work if the population has submitted to defeat or have not made up their minds about the US. Soft approach makes sense. The Sunnis Iraqis have concluded that the post war world they would be in the minority (15 percent) after spending many years ruling the majority thru brute force. In general they rather take their chances fighting the US with any means necessary than live the postwar peace as a minority. In summary, we are dealing with a hostile population that must first be defeated ruthlessly. I do not think US forces have the stomach for it, thus the need to field a Kurdish/Shiite force to carry out these ruthless tactics will be necessary. I know most Americans abhor such tactics, but one needs to read about the nature of counter insurgencies which involve an already hostile and sympathetic population that supports a partisan force that is willing to use ruthless tactics to win. Sunnis are not the majority in Iraq and they are willing to use terrorism to impose their will. The only way to defeat them is to destroy them until they submit. Otherwise we will be defeated by the prolonged hit and run warfare. Withdraw from Iraq will encourage every fundamentalist to bring the war back to our shores.