There is a considerable body of evidence provided by the US military and intelligence community that Iraq has been a major source of recruiting for AQ. So I doubt the ongoing conflict bewteen some foreign fighters and domestic fighters has a significant impact on AQ.
Even the Sect. of Defense asked if we are creating more terrorists then we are killing --
implying he does not have a good answer.

You notice that it was not even discussed as an issue in the original article.

Your optimism on this is more wishful thinking then the objective analysis that was in the original article.

As damaging as the Iraq War has been to the U.S. military, in terms of sheer strain, it has to be much more so on al Qaeda. It may well have been, as Michael Scheuer believes, the war they wanted. I'm not sure they still feel that way.

My question is what would be different if the US had stopped with Afghanistan and not invaded Iraq. At first glance it appears that just about everything you cite in the decline in AQ is due to Afghanistan and that Iraq has not had a significant additional impact.