In his first speech since President George W. Bush abruptly announced the defence secretary's resignation Mr Rumsfeld told an audience of university students and soldiers in Kansas "It is very clear that the major combat operations were an enormous success. It is clear that in phase two of this, it has not gone well enough or fast enough."
Mr Rumsfeld pointed to signs of progress citing Iraq's constitution, its freely elected government, its functioning schools and hospitals, its stock market and the rise of a free press as evidence.
But he said all that had to be weighed against the sectarian violence and the killings of Muslims by other Muslim extremists, which has created "a much more complex situation."
"And quite honestly, our country does not have experience attempting to impose control and our will over vicious, violent extremists that don't have armies, that don't have navies, don't have air forces and operate in the shadows," he said.
Mr Rumsfeld's surprise resignation came the day after a drubbing by Democrats in US mid-term elections largely because of voter anger over Iraq.
President Bush has picked former CIA chief Robert Gates to succeed Mr Rumsfeld, giving him a mandate to take a fresh look at what is seen by many as a floundering US strategy in Iraq.
New options for Iraq
With Mr Rumsfeld's departure, ideas about "plan B" scenarios for Iraq are making the rounds in Washington from federalization to gradual withdrawal of US troops, to a regional conference to sending in massive military reinforcements.
However the strategic and tactical options appear limited.
"Bad as the situation is today, it could get a lot worse if we simply pull out," said Max Boot, an expert at the Council on Foreign Relations.
"It would be a war of all against all. Iraq would probably degenerate into the kind of anarchy seen in Somalia and Afghanistan in the 1990s," he said in an editorial in The Los Angeles Times.
Lawmakers and experts are all eagerly awaiting conclusions of the independent Iraq Study Group led by former secretary of state James Baker, a Republican close to the Bush family as well as former Democratic lawmaker Lee Hamilton and Gates.
The group has looked at options including a gradual pullout of US troops and renewed dialogue with Iraq's neighbours, Iran and Syria.
"I hope that Baker and Hamilton will make a difference. I hope they'll make recommendations to start to redeploy the troops. Because that's what this election was all about," Pennsylvania Representative John Murtha told CNN
television.
Mr Murtha said Robert Gates will "bring a specific change in the Defence Department. He'll listen to the military. He's got an open mind. He's experienced. The people will have confidence in him ... He won't reject the proposals of the military."