BAGHDAD -- An Iraqi appeals court Wednesday set aside a ban on hundreds of candidates for suspected ties to Saddam Hussein's regime, allowing them to run in next month's parliamentary election and offering a chance to ease political showdowns that had deeply worried the White House.
The decision could remove -- at least temporarily -- a major trouble spot in the planning for nationwide voting March 7 to pick lawmakers and the political blocs that will shape the next government in Baghdad.
The blacklist, with more than 450 names, has been widely denounced by Sunni political leaders who view it as a way for the Shiite-led government to undercut Sunni efforts to expand political clout.
For U.S. officials, the dispute rattled their main hopes for the election: a fresh push toward reconciliation between the majority Shiites and the Sunnis who were once on top during Saddam's rule.
The concern about the election's credibility grew so acute that Vice President Joe Biden was in Baghdad last month appealing for ways to cool tensions.
The appeals court decision presents a path to postpone the wrenching debates over who should be ostracized for perceived ties to Saddam's regime. But it came during another reminder that Iraq's sectarian bloodshed is far from over.
A blast tore through a crowd of Shiite pilgrims just outside the holy city of Karbala south of Baghdad, killing at least 23 people and injuring 120 in the second attack this week on the huge religious processions for annual observances, officials said.
The explosion -- called a car bomb by state TV -- also highlighted the impossible task for security forces to fully guard the hundreds of thousands of pilgrims from strikes by suspected Sunni extremists. Earlier, police officials blamed a bomb-rigged motorcycle parked near the procession. The cause of the blast could not be independently verified.
Witnesses described widespread panic as people tried to carry the dead and wounded through a thick crowd of pilgrims packed shoulder to shoulder. Some were trampled as people tried to run from the blast site, said Kareem Madhi, a pilgrim from the nearby city of Hillah.
"I saw a fireball and then black smoke rising," he said. "The extra security is still unable to protect these huge numbers of pilgrims."
The official election campaign period begins Sunday. In recent days, some Sunni leaders had warned of a possible boycott call, which could have shattered the chances to seat a new parliament accepted by all sides.
The compromise offered by the appeals court is more of a yellow light rather than full green: the disputed candidates can run, but winners would not be allowed to take office until their links to the former regime had been fully examined.
This could just mean that the bickering could be delayed until the sensitive time of trying to form a new government after the voting.
A prominent Sunni political figure on the list, Saleh al-Mutlaq, hailed the ruling, however, saying it proved that Iraq's judiciary was neutral.
"The Iraqi legal system is not affected by political decisions," he said.
But the head of the vetting committee that drafted the blacklist accused the court of caving to U.S. political muscle.
"The U.S Embassy played an active role to pressure for the return of the banned candidates," said Ali al-Lami, a Shiite who is also a candidate for parliament.
The election alliance led by Prime Minister Nouri al-Maliki -- whose administration has been backed by Washington -- called the court decision "bloodstained" by allowing suspected Saddam loyalists back into the political fold.
"We won't allow the (Saddam era) killers to climb into parliament and gain legislative power," said a written statement.
There was no immediate comment from U.S. officials.
On Monday, the U.S. ambassador to Iraq, Christopher Hill, told The Associated Press that it was crucial for the election to be seen as fair and open to all.
"We don't want a situation where some people, or some groups of people, do not accept the outcome" of the election, he said. "That can make the security situation problematic."
Iraq's Shiite-led government has pushed hard to weed out Saddam-era officials from public offices and security forces -- a policy initiated by the United States shortly after the U.S.-led invasion in 2003.
Many Sunnis believe the policy went too far -- penalizing innocent people who had to join the Baath party to advance in their chosen careers or gain favors such as seats for advanced university degrees. The loss of so many experienced professionals also hampered the functioning of many government ministries in the years after the U.S.-led invasion.
Outside Karbala, about 50 miles (80 kilometers) south of Baghdad, the blast struck at one of three entrances to the city. Security had been intensified since a suicide bomb attack on the pilgrimage on Monday in Baghdad that killed at least 54 people.
Karbala police and hospital officials said at least 23 people were killed and 120 injured. The officials spoke on condition of anonymity because they were not authorized to brief media. Iraqi police tried to prevent journalists from reaching the scene.
Hours earlier, two separate roadside bombs targeting Shiite pilgrims exploded in Baghdad, killing one and wounding seven others, a security official in the capital said.
For years, the main Shiite pilgrimages have been a prime target for attacks blamed on Sunni extremists seeking to widen sectarian rifts. The current processions have brought hundreds of thousands of people streaming toward Karbala to end the 40-day mourning period marking the death of Imam Hussein, a revered 7th century Shiite figure.
Karbala police spokesman, Maj. Alaa Abbas, said more than 30,000 security personnel were deployed around the city. The measures included bomb-sniffing dogs at the three main entrances to Karbala and undercover intelligence agents in the crowds.
But tight security in the past has failed to prevent bloodshed among Shiite pilgrims or at shrines.
During a Shiite pilgrimage in February 2009, a female suicide bomber attacked a tent filled with women and children resting during the walk to Karbala, killing 40 people and wounding 60 others. A month before that, a suicide bomber dressed in women's clothing and hiding among Iranian pilgrims killed more than three dozen people outside a mosque in Baghdad's Shiite neighborhood of Kazimiyah.
Associated Press Writers Qassim Abdul-Zahra in Baghdad and Salah Nasrawi in Cairo contributed to this report.