This account in the WaPo about the siege of an Iraqi village sounds like every soldiers nightmare. (This was the incicdent where 3 marines died.) The insurgents had armor-piercing ammo and some had flaq vests.
http://www.washingtonpost.com/wp-dyn/content/article/2005/05/10/AR2005051000221.html
See below for more...
"The costly equipment, as well as body armor
later recovered from the bodies of dead
insurgents, suggested that the fighters were
foreigners, the military said. Though the
level of foreigners' involvement in the
insurgency has been disputed for nearly two
years, Muslim men have come to Iraq from
neighboring countries such as Saudi Arabia
and from as far away as Chechnya and
Indonesia to fight the United States and its
allies.
The Marines also found Soviet-designed PKM
machine guns and belts of armor-piercing
ammunition. In contrast, Lima Company was
armed with M-16 assault rifles and carried
nothing comparable -- nothing that could
penetrate walls and floors and still pack
enough force to kill."
After a week of intense bombing attacks (remember all those explosives we never secured?) and now full combat operations near the border, I think it's safe to say we've "turned the corner" - to total chaos.