I believe the chance that the chaos in Iraq could bring countries like Iran and Saudi Arabia into the mix is in the forty to fifty percent range. The big danger is what I call the August 1914 Syndrome. The assassination of Archduke Ferdinand in Sarajevo -- what would have been in the scale of history a minor event -- set in motion activities that turned out to be beyond the ability of the Western powers to control. And they ended up in one of the most brutal wars in man's history by accident. If the Saudis come in heavily on the side of the Sunnis, as they have threatened to do, and the Iranians -- directly or through shadow groups like Hezbollah -- become active on behalf of the Shiites, and the Turks and the Kurds get into a border conflict, the flames could spread throughout the region. The real nightmare beyond the nightmare is if the large Islamic populations in Western Europe become inflamed. Then it could be a global situation.
As I wrote recently, one of the few things we can achieve in Iraq is act as a tripwire to discourage the intervention of other powers. This would decrease the flammability of the situation greatly. A good and wise leader would be attempting to forge a bipartisan coalition around this position. He would be trying to bargain with the public, giving them a substantial troop withdrawal and in return asking for patience beyond this electoral cycle. Alas, we are not governed by any such leader and none are in sight.
UPDATE, 3/15/07: In an interview with the New York Times, Hillary Clinton sketches out a plan similar to what I describe. This is to her credit because it can't be a popular strategy with the base right now.