The agreement between the two main Shi‘ite blocs in Iraq over forming a coalition that would exclude ‘Iyad ‘Allawi's ‘Iraqiyya Bloc could break the logjam left by the electoral stalemate, but not necessarily in a good way.
Reidar Visser on the deal here. He sees it as a step backward, a sectarian Shi‘ite bloc that would presumably try to forge a coalition with the Kurds, leaving Sunnis (which in this context means Arab Sunnis as opposed to Kurds) out in the cold. Juan Cole notes reports that a council of "wise men" chosen by Ayatollah Sistani will choose the candidate for Prime Minister, and that this is being seen as a victory for Iran.
Certainly it's a blow to ‘Allawi's hopes of becoming Prime Minister, and may leave the Sunnis feeling marginalized again after making strides towards finding a role to play. It's probably not the scenario the US Administration would have preferred, and no government has been formed yet, but it certainly looks like a sectarian bloc has been restored.