I think you're right. The Iraqi people will not be able to close the book on the terror of the Saddam era until he is dead. If he gets anything less than death, the Iraqi people and their domestic enemies may see it as a sign of weakness in the new government. Neither is good.
If the people have confidence in the new government, then stability and freedom have a shot.
I do wonder, though, how the anti-death-penalty folks are going to muddy up the works or if they will grant a hypocritical "exemption" for crimes against humanity.