Honestly, Zak, I feel like you keep switching points of reference whenever you don't like one outcome. The issues are tied together, so that won't work.
First it's look, 17 broken UN resolutions. Then it's oh but we don't need the UN anyway. As Noam Chomsky once put it, if you're going to "be a Nazi" and trample the rest of the world regardless, then "at least have the decency" to say so at the start.
Then it's some 5% of the economy doesn't count. Or maybe it does, and immigration is fine as long as it's legal. But if it were all legal, they'd be making more money, and that 5% of the economy wouldn't be making the big capitalists so much money. So perhaps the GNP would not be gaining that amount and the "economic superpower" slumps a tad. At any rate, if you go with legalization, you may take a certain economic risk on the immigrants' (if not the collective) behalf.
I don't believe whole nations or governments are good or evil. Some policies seem to help or not only IF you've been taught that a certain cause is particularly good. I think you'll have a difficult time convincing much of the Middle East that we're helpful. I've seen films of multiple Baghdad people saying sure Saddam was cruel, but at least he didn't disrupt the national economy and steal oil.
The militants are not conceding defeat. They're saying either stay and cause a brutal scene like the globally-beloved Israelis, or get out and leave us be. And the Bush administration has said repeatedly that they won't set a timetable, because when the American troops are gone people would still be there with other ideas. Well, it looks to me like people are going to keep having other ideas no matter how many bullets and dollars we toss around.
In unconventional war, lots of common people think the rebels are honorable and the occupiers are not. For example, the History Channel ran a show called Targeted: Osama which repeatedly mentioned that _many_ Saudis and Pashtuns support Osama. Even a member of Pakistani intelligence, among our many complicated allies, sat up and said, are you kidding of course we wouldn't tell you where he is if we knew! (Although, I sincerely doubt Bush wants Osama captured alive and talking.)
Then what have other nations done to be proud of?
They have maintained local social systems under frequently harsher environmental conditions. Often they've managed quite happily with widespread rice farming or herding. Meanwhile, the West concentrated power in the hands of a few industrialists, then went around the globe disrupting local markets. Even China which the US likes to fear these days, has historically been content to stay on its own landmass and take symbolic gifts or hold skirmishes (Tibet being an exception). While the US was actively colonizing a whole continent and not a few Pacific islands. America could never take care of its own without stealing someone else's, from the very start. I'm not proud of that. Nor would I argue we're the only ones historically (we have Greco-Roman symbols in Washington buildings for a reason). But I think it's honest and worthwhile to say so.