The public perceptions swirling around a "massacre" - as some Iraqi officials have charged - are the latest incident to stall the creation of Iraq's new government.
Did US forces attack a mosque in a Shiite district of Baghdad Sunday night, killing 17 unarmed worshippers, an act that Iraq's Shiite interior minister called a "horrible violation" that has dominated Iraqi TV and sparked a political outcry?
Or, did Iraqi special forces, backed up by US advisers, take on a "terrorist cell" at an office complex, kill 16 "insurgents," and free an Iraqi hostage - only to have Iraqi provocateurs, as top US commanders allege, "set the scene up" to look like an atrocity?
The truth may be the latest war casualty as perceptions shape Iraq's political reality, and the prevailing view of a bloody US raid is undermining US-backed efforts to form a coalition government, while boosting the influence of anti-US cleric Moqtada al-Sadr.
"How could [Americans] come out of this mess?" asks Ghassan Atiyyah, head of the Iraq Foundation for Development and Democracy, who was reached in London. "Sadr is becoming a strong force in Iraqi politics. When he was weak, they could not deal with him, and now he is strong."
"I very much appreciate what [US Ambassador Zalmay Khalilzad] is doing" to form a unity government, says Mr. Atiyyah. "It should have been done two and a half years ago, to balance these things."
Mr. Sadr conducted two popular revolts against US forces in 2004, and has become kingmaker by supporting Iraq's embattled Prime Minister Ibrahim al-Jaafari, against efforts by Kurdish, Sunni Arab, and secular parties - as well as, reportedly, the US - to see him go.
Sadr's Mahdi Army militia - which controls the Mustafa Husseiniya raided by US and Iraqi forces Sunday, and is accused of sectarian killings in Baghdad that mostly target Sunni Arabs - can deploy immediately in their thousands, and are often allowed to work unchecked by Iraq's Shiite-dominated security forces.
Underscoring the significance of the raid, President Jalal Talabani, a Kurd, vowed to oversee an investigation. A Husseiniyeh is a Shiite place for prayer and other religious purposes. In Iraq it is considered virtually the same as a mosque.
"It is very important to clarify - an investigation could help defuse tension," says Mahmoud Othman, a Kurdish MP who noted that Shiites did not turn up for talks Monday to form the government.
"Always people like Moqtada and extremists will benefit from this in the street, they will get sympathy from ordinary people," says Mr. Othman. "The last three years many things like this have happened: [Americans] hit a wedding ceremony, or hit the wrong house, or get wrong information - some anti-American people want them to make mistakes, to build on that."
The deputy US commander in Iraq, Lt. Gen. Peter Chiarelli, early Tuesday dismissed reports that a mosque had been hit, or that the 50 Iraqi Special Operations forces, backed up by 25 US advisers, had chosen the wrong target. Besides capturing some weaponry, they released an Iraqi dental technician who had been kidnapped 12 hours earlier.
Inside the religious complex, with its minaret, are series of rooms for teaching the Koran, a large prayer room, and Imam's quarters, as well as offices of Mr. Jafaari's Dawa Party, which were also raided. Even two days later, an Iraqi employee of the Monitor could see four places where the pockmarks of bullet holes coincided with bloodstains, and other evidence of killings at the place.
Iraqi units "told us point blank that this was not a mosque," said Lt. Gen. Chiarelli, noting that, on US military maps, the Mustafa Mosque was in fact six blocks north of their target. He said that Iraqi forces "did the fighting," and there was "gunfire from every room."
"After the fact someone went in and made the scene look different than it was. There's been huge misinformation," Chiarelli said. "I think the [anti-US] backlash has been caused by the folks who set the scene up."
That explanation did not wash Tuesday in the angry Ur neighborhood of northeast Baghdad, near the poor Shiite enclave of Sadr City, where witnesses and residents said the bloodshed has boosted their support of Sadr and his Mahdi Army.
"I need the government that I voted for to protect us, but they failed," says Souad Mohammad, the deputy director of a school, whose second-floor apartment, across the street from the mosque, is riven with holes from small-caliber US armor-piercing rounds.
"They came and killed the young people, and we want the Imam Mahdi Army to protect us, because they are from us, they are Iraqi people," says Mrs. Mohammad. "When the Mahdi Army is here, it's very quiet, no one is assassinated in this area, there are no car bombs, and at night there are checkpoints to protect us."
The popular view of US wrongdoing has been fed by the images on Al-Furat television - the station run by one of the most powerful Shiite parties in Iraq - of bags of explosives with wires poking out, that they allege US forces left behind.
The result has been a firestorm among the majority Shiite, which have borne the brunt of Sunni Arab-led insurgent attacks aimed at sparking a full-scale civil war, and who grate at US insistence on giving the minority Sunni Arabs a real political role.
Haidar al-Abbadi, an adviser to Jafaari, warned of "death squads working alongside US troops that execute people without any reason while they are praying," he told Al-Arabiya television.
True or not, that view is widely held. The US-Iraqi raid "means they are targeting Shiites, to stop the political process," says Jassim Mohamad Ali, whose face was scratched by jumping over a fence in the Mustafa compound, to hide from the raiders. "The only thing I witness from the Mahdi Army, they have honor and are loyal to this country, and they try to keep the Iraqi street clean," he says.
"People always say: The Americans never do these things, but when I saw them with helicopters and their Humvees and Bradleys, I am very sure now they are terrorists," says Mr. Ali, giving a stark opinion increasingly expressed on Iraqi airwaves following the raid. "We will fight terrorism, whether it is [extreme Sunni] Wahhabi or American."
• Awadh al-Taee contributed to this report.