While I agree with the points about the American media, this is an incredibly stupid move on our part. This undercuts trust in the Iraqi media and confirms the accustations by the anti-American crowd that the freedoms we're supposedly bestowing on Iraq are a sham. Any positive news printed in Iraqi newspapers will now immediately be dismissed as U.S. propaganda.
I still think its better than no news or bad news. Pix of smiling Iraqi children with school books and with GI's in front of new schools can't hurt, regardless of who publishes them.