You're right. Bush lost his political compass long ago. He should have been declaring Iraq a victory long ago and stated that we were now only there to assist in peackeeping and the rest is up to Iraq etc etc.
If Iraq were later to go south he would have been able to say we won the war but Iraq itself lost the peace. We did our part by getting Saddam out of there and setting up a democratic govt. Our work was a success. End of story. He should have never set the expectation that how the peace turns out is a reflection on us. Bush has played this Iraq thing poorly politically and has allowed the lying stinking democrats a foothold to power. An incredible blunder.
If Dems gain control of both House and Senate ... that would be truly disastrous, but I don't believe that's going to happen. The President is good at salvaging enough political capital to get by. In the long run, we will see exactly what you said as another in a set of gambles which basically worked. Iraq cannot go south - that would also be a disaster.