McNamara said:
It's possible the government is backing the weapons smuggling simply to stir things up, but that seems too Machiavellian for them. Considering how strongly religious reasons influence their policy, it just doesn't make sense for them to be involved in killing fellow Shi'ites. Followers of Wahhabism, though, believe they should kill moderates no matter which sect they belong to. It's got me puzzled.
This is probably a simplification of things but this might help,
Remember, that there are three distinct groups that are involved in the "insurgency" (Perhaps its easier to think of three different insurgencies). You've got the Sunni's (the reminents of the Ba'ath party, republican guard, fedayeen sadaam etc,) the Foreign fighters ("Al Qaeda in Iraq" or whatever Abu Musaab Zarqawi is calling his group these days, as well as groups of individuals from other Arab states like the Wahabbis) and the Shi'ites ( people like Muqtada Al Sadar and his followers). While their overall goals are doubtlessly different, some the means each group uses are similar (ie attacking Coalition forces).
The weapons comming from Iran were/are almost certainly bound for the Shi'ites. Why? Iran has been Iraq's arch enemy for a long time- that and the majority of the population of Iraq are Shi'ites.
With the fall of the Saddam and the Ba'ath government there was a power vaccum (and still is to some extent) that Iran moved to fill it and exert its own influence in the affairs of reconstruction Iraq- similar to how Pakistan exerts its influence in Afghanistan by supporting the southern tribes after the fall of the Taliban, or how it supported the more religiously conservative (ie Wahhabis, and the likes of UBL) members of the Muja-hadeen during the Soviet occupation.
Probable example of Iran exerting Influence early: Al Sadar's uprising in Najaf early after the fall of Saddam.
As for the use of the weapons:
Likely against US and coalition forces to further press for a withdrawl- where Iran would doubtless move to further shape Iraqs political arena.
Against Sunni members of Iraq's government, in retaliation for attacks against Shi'ite members.
Against Sunni elements of the insurgency, as well as foreign fighters.