Muqtada al Sadr and several hundred of his armed followers are surrounded by American and Iraqi troops in the  Imam Ali Shrine. For the last 24 hours, the government has maintained a ceasefire with Sadr, to allow for negotiations. The government wants Sadr and his gunmen out of the shrine, and Sadr wants to avoid getting killed. Most Iraqis see Sadr as a young hothead, and a puppet of the Iranians. A minority of Iraqis, perhaps ten percent, agree with Sadr's concept of an Islamic republic (like in Iran), and that's enough people to create his "army" of gunmen. The majority of Iraqis are looking to the government to deal with Sadr. That means destroying Sadr's militia, and preserving the holy places. Killing or imprisoning Sadr won't eliminate the problem of Iranian influence and Iraqis who desire a religious dictatorship. In fact, the elimination of Sadr would make it possible for the Shia conservative faction to develop a more effective leader. Sadr is a devious, ruthless and unpredictable fellow who cannot be trusted. But he's in the shrine and doesn't much care that the people of Najaf hate him for it. 

The fighting against Sunni Arab gunmen in and around Fallujah and other Saddam strongholds continues. A minority among the Sunni Arab Iraqis wants a religious dictatorship, but one dominated by Sunnis. This is even less likely to happen than a Shia religious dictatorship.