I don't know if anyone can really say the world - or even just Iraq - is a better place today than it was yesterday; so I'm not convinced execution was right. After all, we've now done to him what he did to others. Are we better than him because our ways of killing are nicer than his?
As to what it will do to Iraq, who can say? The country is split between Sunni, who have lost power since his downfall and are outraged, and Shia, who have gained power and are happy. (And Kurds, who don't want to be there at all.) I don't see any early end to the insurgency. Maybe it will take a generation; maybe it will take centuries. The surest way of pacifying absolutely everyone would be to leave the country prosperous and give people something to lose when things go wrong; but we haven't even begun to do this, as far as I can see. And if it comes it will probably do so by selling Iraq's oil to Texas, which won't necessary make Iraqis proud to be Iraqis, and more than Brits are proud to be the 51st state under Governor Blair.