From the historical experience, it would probably make things worse. If the Iraqis themselves were to choose to do so, then it should be supported (although I still have my doubts it would be effective), but unless it becomes absolutely unavoidable, no outside powers should impose such a solution.
Read this interview from Peace Magazine for a more thorough overview of how, historically, partitioning countries in order to bring political stability has often simply locked a conflict in - it becomes a long-running conflict between neighboring states and becomes ever more intractible. It's very hard to divide a country in ways that makes either side happy and divisions are enormously disruptive, socially, politically, and economically. They also tend to bring both states into a siege mentality that result in greater conflict and more internal instability. It's possible Iraq could avoid such an outcome, but the ethnic makeup of Iraq and the internal dynamics make that unlikely. And the breakup of Yugoslavia, though it came from within, still resulted in massive violence and instability.
http://www.peacemagazine.org/archive/v11n3p12.htmMETTA SPENCER: Back in September of 1991 we reviewed your book, Warpaths: The Politics of Partition (New York: Hill and Wang, 1990). Since then it has become even more relevant, with the secessionist wars in the former Yugoslavia and the former Soviet Union, and with the prospect of secession in Canada. I think that everybody in the world ought to read your book, but since not everyone will, I'd like to discuss your findings.
ROBERT SCHAEFFER: Okay. The book looks at what has happened in countries that were divided by the great powers after World War II, such as Korea, China, Vietnam, India, Palestine, Cyprus, Germany, and Ireland, which was divided after World War I. The intellectual questions were: Why did they decide to divide these countries? Was partition a good idea? Did it work? What were its consequences? The main reason for partition was to try to settle disputes between contending political parties that wanted state power on their own. In Korea there were Communists and non-Communists; in India there were Hindus and Moslems. When the war ended and independence seemed likely, instead of awarding state power to one group or the other, the great powers decided to split the difference and award state power to both by dividing those countries in two. They thought that partition would solve the problems between these contending groups, which would then leave each other alone.
SPENCER: Famous last words!
SCHAEFFER: Exactly. Instead of solving problems, partition actually created three major problems that the people who divided these countries had not expected. First, partition was enormously disruptive socially. It led immediately to widespread migrations between two countries. For example, tens of thousands of people migrated across the new Irish borders. In Korea and Vietnam, hundreds of thousands, if not millions, migrated across the borders very rapidly. Seventeen million people migrated across the Indo-Pakistani borders in a six-month period, in history's fastest migration. Many people, fearing for their lives, fled across the borders. Others were told by the governments, "You should live where you're supposed to"--Communists in the Communist part, capitalists in the capitalist part, Muslims in Pakistan, and Hindus in India. People left behind families, businesses, and the graves of their dead ancestors. These migrations often led to war between migrating groups, so that millions of people died in the violence. None of the people who divided these countries expected that people would move in such large numbers.