It is possible, but by no means certain, that Zarqawi's death is highly significant. There has been talk today of significant intelligence finds at the 'safe house' in which he was found. It also seems certain that he was betrayed from within al Qaeda, or possibly within their baathist allies. The person who betrayed him could be a government (or Coalition) mole, but is probably more likely to be a rival faction leader.
Other leading figures among al Qaeda and the baathists must be wondering who betrayed Zarqawi. There could be reprisals and counter reprisals. The terrorists could spend a great deal of effort killing each other, or betraying each other to achieve the same end.
That said, it is also possible that rival factions will try to impress people with their ability to hit the Iraqi government and its allies.
On balance, I expect a considerable short-term degrading of the terrorist capacity to hit either the government or its allies. The long-term strength of the terrorists will depend on the political and security situation. The more people have confidence in the ability of the government to govern, the weaker the terrorists will become. Those signs have been healthy for some time, and are likely to become more so
