1. I am sure that the Iraq invasion didn't hurt and convinced Ghaddafi (*sigh* if only there were a convention on how to spell Arabic names in the Roman alphabet) that he was embarking on the right course, but his attempts to rejoin the world community generally and the war on terror specifically have been going on for longer than the campaign against Saddam.
Here are two links from today's Observer newspaper that indicate he has been trying to "come in form the cold" and join the US/UK side in the WoT since at least the aftermath of 9-11.
Libya ceases WMD programmes and opens up to inspectionLiyba uses it's extensive intelligence network in the Middle East to help in the fight against terrorismHis olive branches over the Lockerbie bombing go back even a little further than that.
So, while the Iraq campaign can only have solidified Ghaddafi's intent and helped convince him he was taking the right road, I doubt very much if it was the reason he has acted.
2. Yes, after a reasonable amount of time - say, 3-6 months. Perhaps after the intelligence already shared by Libya leads to some high-profile arrests, so it can be clearly seen that Liyba is now on the right side of the war on terror; the Libyans seem to have stopped actively sponsoring international terror some time before 9-11. Nor do they have the kind of tangential links that condemned Iraq- Libya doesn't use state funds to compensate the families of suicide bombers, at least as far was we know.
3. No. As has been said before, the USA and other countries have productive international relationships with dictators all the time, before and since 9-11 (so we can't pretend that everything changed then). One notable example would be the House of Saud, who have more current links to anti-Western terrorism than any other country (including Saddam's Iraq), yet are seen as allies, if not quite as trustworthy as they were.
Plus, it would be somewhat hypocritical of the USA and her allies to deny much-needed trade and aid to Libya after they have done exactly the things that the Allies said they wanted Saddam to do before the war started.
To remind you, Blair said Saddam could stay if he handed over all the WMDs; and Bush said Saddam would be permitted to go into exile with his family just
days before the shooting started, not to mention his now-famous "you're either with us or against us" speech.
If Ghaddafi continues on this course, which clearly puts him in the "with us" camp regardless of his past history, Bush should stick to his end of the deal and treat Libya more kindly.
This is even more urgent, since the very fact that Ghaddafi is an unelected dictator means that the Libyan people as a whole are largely innocent of any of the wrongdoings of their government. In the current international climate, and in an election year, I suggest that GWB doesn't need more photos of starving babies in countries subject to US sanctions waved by his political opponents, especially as there is no "oil-for-food" programme analogous to the one Saddam hijacked for his own PR (at the expense of many innocent lives).
Surely America now needs as many Arab friends as it can get, if it ever hopes to win a war on terror that (so far) has been exclusively limited to Arab terrorists?
I suggest that if this administration does not visibly warm to a regime that takes steps like the Libyans have done, the whole Arab world will become more convinced that Arabs cannot win whatever they do, and that America's beef is not with terrorists, but with Arabs. And that would not only be bad politics, but would put America in the wrong and lose any moral authority it had on this issue in the eyes of most of the rest of the world, whether they be current allies or not.
Standing alone like this (well, probably with Israel) might appeal to some American ideas of exceptionalism, but it would cause more problems than it solves.