A furious crowd hacked two clerics to death in a Shiite Muslim shrine Thursday when a meeting meant to be a model of reconciliation in post-Saddam Iraq erupted into a melee between rivals, witnesses said.

The bloodshed underscored how difficult it will be to bridge deep emnities and political rivalries in Iraq as the American military and interim administration led by retired U.S. Gen. Jay Garner tries to fill the power vaccuum left by the collapse of Saddam's regime.

The U.S. military had been eager to display the meeting at the shrine of Imam Ali, considered by Shiites the successor to the prophet Muhammad. The military flew two helicopters of journalists to the holy city of Najaf to see it. But the group arrived at the site too late to witness what happened.

One of the slain clerics was Abdul Majid al-Khoei, a prominent Shiite figure opposed to Iraqi President Saddam Hussein. Al-Khoei -- the son of a former Shiite Muslim supreme ayatollah persecuted by Saddam -- had returned to Iraq from exile in London on April 3 and urged the country's Shiite majority to cooperate with U.S. troops.

The other cleric who was killed was Haider al-Kadar, a widely hated Saddam loyalist and part of the Iraqi leader's ministry of religion.

Al-Khoei had accompanied al-Kadar to the meeting in a gesture of reconciliation.

But things went horribly wrong.

"People attacked and killed both of them inside the mosque," said Ali Assayid Haider, a mullah who traveled from the southern city of Basra for the meeting.

One witness said a third person was killed; an unknown number of people were wounded.

The witness accounts could not be independently confirmed. But it appeared that when the two men arrived at the shrine, members of another faction loyal to the family of a different mullah, the late Mohammed Baqir al-Sadr, were furious at al-Kadar's presence.

The al-Sadr family also has a longstanding rivalry for influence with the al-Khoei clan.

"Al-Kadar was an animal," said Adil Adnan al-Moussawi, 25, a witness. "Everybody was afraid of him. The people were shouting that they hated him, that he should not be there."

Apparently feeling threatened -- and to defend al-Kadar -- al-Khoei pulled a gun and fired one or two shots. There were conflicting accounts over whether he fired the bullets into the air, or in the crowd.

Both men were then rushed by the crowd and hacked to death with swords and knives, the witnesses said.

In Washington, State Department spokesman Richard Boucher said the United States was "deeply saddened" by al-Khoei's death.

"It's a reminder that Iraq is still dangerous in many places, and a reminder of how important it is for all of us to work to create a situation where Iraqis can express themselves freely, where all points of view can be expressed freely and without intimidation or violence," Boucher said.

There were no U.S. troops near the meeting because of a deal with local mullahs to keep armed troops at least 500 yards from the area.

Journalists did not enter the mosque, which is decorated with a gold dome and minarets and ornate tiling. But they saw bloodstains on a sidewalk outside. Special Forces troops launched an investigation to determine what happened, said Capt. Townley Hedrick, a spokesman for the 101st Airborne Division, which controls most of Najaf.

Military officials refused to describe the incident as a setback and said that the coalition did not appear to be the target.

"I think it remains to be seen what actually happened," said Marine Maj. David Andersen. "This will be one of the big challenges for Iraq and its sects to co-exist and basically come to some kind of agreement or unity."

Shiites make up the majority -- 60 percent -- of Iraq's 26 million people and were long repressed by Saddam's mainly Sunni Muslim regime. But there are numerous faultlines running through the Shiite community. Some are connected to tribe and family, but they also interlace with political issues, including over how to deal with the Americans.

Jawad al-Khalsy, a Damascus-based Iraqi opposition member, said Thursday's bloodshed was rooted in opposition to the U.S. military presence in Iraq. Al-Khoei's killers were "angry people who were frustrated from occupation forces," he told the Arab satellite station Al-Jazeera. He said exiled opposition members should not return to Iraq alongside U.S. forces "because they are not going to be welcomed and will be associated with the invaders."

However, a tearful Ghanem Jawad at the Khoei foundation in London -- a charitable organization run by al-Khoei -- accused "followers of the regime" of attacking al-Khoei.

Al-Khoei was among the most prominent returned exiles: the son of the late Ayatollah Abul-Qassim al-Khoei, who was the Shiite world's spiritual leader. The elder al-Khoei lived -- and was revered -- in Najaf at the time of the 1991 Shiite uprising crushed by Saddam. He was later forced to pronounce his loyalty to Saddam on Iraqi television and was put under house arrest until his death in 1992.

After his return to Iraq, the younger al-Khoei told The Associated Press that he and other exiles had persuaded the people of Najaf to cooperate with U.S. troops. He also urged his followers in the Shiite cities to stay at home and let the U.S. troops do their job.

Najaf is the seat of the Shiites' spiritual leaders, known as ayatollahs, and a center for scientific, literary and theological studies for the Islamic world. For the world's nearly 120 million Shiites, Najaf is the third holiest city, behind Mecca and Medina in Saudi Arabia.