Kurdish state....annex it
Personally, I think the route of an independent Kurdish state is the proper direction. However, your idea has possibilities.
A federal Turkey which included a predominantly Kurdish state in the former N. Iraq and included those oil rich regions just to the south of the automomous zone would make a lot of sense.
There would have to be extreme attention during the creation of the federation to insuring the equality of opportunity for all Turkish states and the subordination of none of them.
I think the route of an independent Kurdish state is the proper direction.
We've got a 40 billion dollar project going in the region, 21 dams and 19 power generation facilities, irrigation systems, etc. This project is aimed at developing this very impoverished region. Seeing how it's aimed at developing the poor, one would think it should be a World Bank project, but no. We have to flip the bill. Already we've built massive dams and the project is starting to bear fruit.
All of this is happening under Ankara's control.
A Kurdish state is immature at this point. 99% of the populus in the region is severely undereducated. They haven't applied the rights they've beeen granted, but still - after 80 years - stick to paternalism and feudalism. Any Kurdish state would definitely be a liability in many aspects. The best way to bring them along and into the 21st (heck, even the 20th) century is under Ankara.
As far as Turkey becoming a federation of states, this is also immature. The level of education, and the economy, even though lightyears ahead of our Mid Eastern neighbors, does not lend itself to the concept. Turkey, for now, will remain divided into geographical regions, which are: Marmara, Aegean, Mediterranean, Central Anatolian, Black Sea, East Anatolian, and Southeast Anatolian.
Even you in Europe and the US are not ready for politial and national regions in Turkey. We've had to expel countless "good doers" who thought it their duty in life to come into our country and teach our ethnic groups that they are not Turks. This reached a most uncomfortable level when we realized the Russian, Iranian, Armenian, Greek and French military support for the terrorist Marxist Leninist PKK (Kurdistan Workers Party). It was also interesting to see the PKK set up camp in DC, under US protection, right across from our embassy for months distributing their propaganda preceding 9/11. Your congress hindered helicopter sales to Turkey, and attempted to force us to free captured terrorists. I was shocked to hear on a PBS aired high school competition the following question: "Which nation is currently fighting for independence in southeastern Turkey?" The kids were proud to know that it was the Kurds. Yet nobody seems to realize that it is a handful of communist terrorists, who kill other Kurds who do not play along.
No, neither you nor the Kurds are ready for such an endeavor..