BAGHDAD - Violence dropped dramatically in Iraq in the second half of 2007, but the progress came at a high price: The year was the deadliest for the U.S. military since the 2003 invasion, with 899 troops killed.

American commanders and diplomats, however, say the battlefield gains against insurgents such as al-Qaeda in Iraq offer only a partial picture of where Iraq stands as the war moves toward its five-year mark in March.

Two critical shifts that boosted U.S.-led forces in 2007 - a self-imposed cease-fire by a main Shiite militia, and a grassroots Sunni revolt against extremists - could still unravel unless serious unity efforts are made by the Iraqi government.

Iran also remains a major wild card. U.S. officials believe the neighboring country has helped quiet Iraq by reducing its flow of suspected aid to Shiite fighters, including materials needed for deadly roadside bombs.

But Iran's apparent hands-off policies could come under strain as Shiite factions - some favoring Iran, others not - battle for control of Iraq's oil-rich south.

The Pentagon, meanwhile, will increasingly look to the uneven Iraqi security forces to carry the load in 2008 as demands for an American exit strategy grow sharper during the U.S. election year.

Britain, the main U.S. coalition partner in Iraq, is gradually drawing down its forces, and other allies, including Poland and Australia, are contemplating full-scale withdrawals in the coming year.

"We're focusing our energy on building on what coalition and Iraqi troopers have accomplished in 2007," Gen. David Petraeus told Western journalists on Saturday. "Success will not, however, be akin to flipping on a light switch. It will emerge slowly and fitfully, with reverses as well as advances, accumulating fewer bad days and gradually more good days."

That arc of progress played out in the raw statistics of U.S. and Iraqi casualties.

American military deaths peaked in May with 126 troops killed. It was then that the United States began ramping up its attacks against insurgent strongholds, leading to increased clashes in Baghdad and other key areas.

Seven months on, commanders and analysts say the aggressive U.S. strategy of targeting al-Qaeda in Iraq strongholds is paying off: U.S. casualties have dropped sharply. As of last night in Baghdad, 21 deaths were reported in December, one more than in February 2004, which had the lowest monthly total of the war.

The 899 deaths in 2007 surpassed the previously highest death toll in 2004, when 850 U.S. soldiers were killed. The total for 2007 could rise slightly; occasionally the military reports casualties a few days after they occur. The military reported the non-combat-related death of a soldier yesterday.

At least 3,902 members of the U.S. military have died since the war began. Of those, at least 3,175 died as a result of hostile action, according to the military's numbers.

Iraqi civilian deaths have tracked that decline, and overall violence across Iraq is down roughly 60 percent, U.S. commanders say.

Since the influx of 30,000 U.S. troops that began in June, the lessening violence has meant that new problems have emerged.

An example, U.S. Ambassador Ryan Crocker said during a recent briefing, is how the improving security situation is in part luring back Iraqis who had taken refuge in Syria, Jordan and elsewhere.

Their return is "a good thing, obviously," he said, "but a process is going to have to be carefully managed so that it doesn't sow the seeds of new tension and instability."

Along with the increase in U.S. troops, Iraq's lessening violence has been attributed to a self-imposed freeze on activities by the Mahdi Army - the militia of radical Shiite cleric Muqtada al-Sadr.

Another important change has been the quick growth of mostly Sunni anti-al-Qaeda in Iraq groups, or "awakening councils," who once fought against U.S. and Iraqi forces but now point their guns toward the insurgents.

Of the more than 70,000 fighters in the awakening councils, only 20 percent are expected to be absorbed into the Iraqi security forces. The rest are to receive job training through a joint $300 million program Iraqi and American officials are creating.

There are few details about how the program will be carried out, but analysts say it must succeed, or the Sunni fighters who do not join Iraq's military may sell their services to the insurgents.

Mourners Visit Hussein's Tomb

Hundreds of mourners

visited the tomb of Saddam Hussein yesterday to light candles and recite verses from the Koran

in memory of the ousted dictator who was hanged a year ago.

Security forces

braced for possible attacks in Baghdad and the Sunni heartland to the north, where Hussein's chaotic execution heightened the alienation many Sunnis feel under Iraq's new Shiite rulers.

Driving bans were

imposed in the flashpoint cities of Baiji and Dour to ward against car bombs, and extra checkpoints went up in and around Tikrit. But there were no reports of violence associated with the anniversary.

In Al Auja

, Saddam's birthplace on Tikrit's outskirts, schoolchildren lit candles in the hall where the dictator was laid to rest. Hundreds visited the tomb - decked in flowers and the Iraqi flag - but it was a far cry from the crowds of thousands that Hussein could command in his lifetime.

- Los Angeles Times