Did Iran turn on radical Shia cleric Moqtada Sadr?

Seems Iran has been trying to have it both ways. On the one hand they have been funding and arming Sadr while on the other hand Iran has been cooperating with the US: From BBC

Tactical co-operation

Iran's top officials are aware of this. They are aware too of what the US occupation authorities have done in Iraq.

Their present co-operation with Washington is a tactical move. They want to help stabilise the situation in Iraq to facilitate elections there so the Shia majority can assume power through the ballot box, and hasten the departure of the Anglo-American occupiers.

And then Sadr caves in: From BBC

Aides to the cleric say he has dropped all his main demands and plans to turn his militia into a political movement.

So, what does Sadr do? From BBC

An Iranian diplomat has been shot dead in the Iraqi capital Baghdad.
First secretary Khalil Naimi was attacked while driving near the embassy. Correspondents have seen a bullet-ridden car with a body inside.

While it is not clear who killed the Iranian, who else would want to?

Update: UPI has some good insight into Sadr's precarious position.