I could care less what they think. If they're so stupid as to have this incident cause them to join the terrorists then good better to kill them now and get them out of the gene pool. Once the smoke clears the good Iraqis that understand what were are trying to do will ultimately be responsible for their country and their fellow countrymen and have an easier time with their fledgling democracy with the crazies out of the way. The US will have fewer potential terrorists in the future.
More likely the average Arab is shocked at our tearing ourselves to pieces over, relatively speaking, nothing (no one was put through a wood chipper).
Has decided we are the weak horse because we cannot put down an uprising in one of the most anti-American towns there is, Fallujah, for fearing of hurting civilians who hate us.
And is trying to figure who the strong horse is going to be after June 30th, whether it will be the numerous, fanatical, but disorganized Shiites or the relatively few, but prosperous and well organized rehabilitated Ba'athists.