The insurgency will not listen to governmental authority or US negotiation pleas.  Peace talks have broken down repeatedly and the insurgency believes that they are invulnerable.  It is time to show them that they are human just like the rest of us, and therefore fallible.

The new Fallujah Plan:

The US military will surround and prepare to assault Fallujah.

Air strikes and artillery bombardment will continue.

A temporary cease-fire will be called.

An ultimatum is to be issued: If the insurgents refuse to lay down their arms and surrender peacefully and unconditionally, then the assembled forces will proceed to enter the city, burn every building to the ground, kill every man, woman, child, and animal, insurgent or civillian, in the city; in other words, wipe Fallujah off the face of the Earth.

Air strikes and artillery begin again.

If the insurgents refuse to surrender, which I suspect they won't, begin the extermination process.

Continue extermination until militants cry for mercy and surrender.

Show them the true nature of warfare and what it does to humanity.  Show them that it's their fault that we can't fix the problems that are cropping up in Iraq.  Show them that they are responsible for deaths of their own people.  Show them that the US cannot repair the damage it did with them in the way. 

And if they still do not see, then show no mercy, for they deserve none if they cannot accept what is presented before them.