Here's my take on the whole situation...
The private contractors are hired for a reason, they are armed and trained and protect diplomats, etc... They have the authorization to use force against an imminent threat. The fire fight that was caused by some contractors which resulted in the death of innocent civilians does not reflect on ALL of blackwater and other agencies! Who knows what happened duing that firefight... The civis were probably seen as a threat in some shape or form, so what were the contractors to do? Sit there and wait to get shot? Hell no... If I was there and felt threatened I'd eliminate the thread immediately regardless if it meant Iwas going to get booted from Iraq.
Lets say for the sake of argument that these contractors acted in error and shot the civilians for no reason really... It endangered the lives of our troops, and the civilians. Should blackwater and other agencies be kicked out of Iraq for the duty commited by a few contractors? I sure as hell don't think so... I think THOSE contractors should get the boot.
What about our military? You know how many times our guys have f'ed up and killed kids and such by accident? When you're in a warzone you're paranoid to the max... It's either kill or be killed... Sometimes innocent people get into the mix, It's just part of war sadly. You don't see all our troops getting kicked out of Iraq for all their wrong doings.