FALLUJA, Iraq (CNN) -- Smoke rose from Falluja three short years ago.
Once a stronghold for al Qaeda in Iraq, the city saw brutal urban combat after insurgents ambushed, killed and mutilated four U.S. security contractors, leaving their charred bodies dangling from a bridge over the Euphrates River in spring 2004.
U.S. and Iraqi forces attacked insurgents in Falluja and embarked on one of the largest offensives of the Iraq war in November of that year.
The battles killed about 1,200 militants, eight Iraqi soldiers and 51 U.S. troops, mostly Marines, according to the Pentagon. About 95 percent of Falluja's population was displaced.
After the city 30 miles west of Baghdad was pacified, the United States committed more than $200 million to reconstruction projects in Falluja, and a lot has changed in the past three years.
Now, small cafes and grocery stores line streets once dusty and abandoned. Customers finger vibrant clothes, fabric and jewelry in shops near beige concrete walls that still bear the scars of war. Watch colorful street scenes in Falluja »
Violence is down, and there's more grass-roots support for the U.S. military and the Iraqi government in the predominantly Sunni Muslim city in Anbar province.
Now, Iraqis in Falluja are back to the rhythms of everyday life: They work, shop -- and rebuild.
To U.S. commanders, the dramatic turnaround shows why U.S. troops must stay longer in Iraq. The fragile security gains need time to take root in Falluja and other towns and cities in Iraq, they say, time that will help lift a fractured nation toward a future without so much bloodshed.
Adm. William Fallon, head of the U.S. Central Command, toured Falluja this week and marveled at the resurgent city of several hundred thousand.
He strolled its streets and stopped to accept a sip of tea that a shopkeeper offered in a glass mug resting in a white-and-red saucer.
The admiral walked through markets full of tomatoes and meat, past rows of handbags and shoes for sale, near a smiling gaggle of children offering pastries on a plate. He saw vendors selling embroidered women's shirts of yellow and orange, lime green and light blue.
"It's a huge change from the last time I was here," Fallon said, surveying a crowd near an outdoor butcher's stall, with carcasses strung up for customers to inspect. "Many, many more people are out."
A team of U.S. Marines guarded the admiral at the beginning of his walking tour, but eventually the detail included only Iraqi police officers.
Ordinary Iraqis approached to chat or shake his hand.
Despite the progress, problems remain.
Homes and businesses have power for only a few hours a day. People scramble to find fuel. And men without jobs linger on the streets; the United States even pays some of the unemployed so they won't gravitate to the insurgency.
Yet the city is no longer synonymous with chaos, despair and violent death. The U.S. military is working to make normal life normal again in Falluja. E-mail to a friend