I totally agree that the decision was mainly due to the threat Harry would have inadvertantly posed to his fellow soldiers.
Prince Harry like all soldiers desperately wanted to go to Iraq and do what he was trained to do. Obviously I don't know, but I would suspect that much of the Royal family would've wanted him to go as it would do the families image a world of good. Also, if the decision was made to keep him home for his own safety, why would they have allowed Andrew to go and fight in the Falklands? Neither man is the direct heir to the throne.
Harry would've been such a juicy target for the insurgents, it would've brought a dramatic increase in attacks on the British in the south. I for one would definitely not want to be anywhere near him when out on the ground on patrol. He would be the most effective bullet catcher in the history of warfare.
It's a great decision for the soldiers of the regiment, but an absolute tragedy for Harry personally. I feel for him.
Anyone who starts complaining that it's one rule for him and another for everyone else, simply doesn't understand the reality of it.