What did they expect? Enemy troops to arrange themselves in nice, neat lines just perfect for bombing or strafing? It was obvious that the Iraqi army would do this.
If anyone can be an enemy, then every Iraqi is a potential target... and when non-combattants get caught in the crossfire, that won't win any Iraqi hearts and minds... Ordinary Iraqi citizens are much more likely to be dragged into this conflict, and may very well become motivated to fight as guerrillas themselves.