To watch Gen. David Petraeus work the crowds in Baghdad’s markets, one might think he was running for local office.

But as Petraeus greeted locals in Arabic and shook hands Wednesday, he was on his final battlefield tour of the country before handing over command of U.S.-led forces in Iraq next week and taking on a new job as head of Central Command.

Petraeus gave his final U.S. interview before the transition to FOX News, and expressed optimism -- significant coming from a commander often cautious about signs of progress in Iraq.

"There's a lot left to be done. You'd like to complete everything but that's not possible," he said. "It's been very, very hard. There’s been nothing easy about this … In the beginning we said it was hard but not hopeless. I think now it’s still hard but it’s hopeful."

As Petraeus walked with minimal security -- no helicopters overhead, no flak jackets and no helmets -- the commander said much has changed since the start of the troop surge.

"The first month I returned, there were 42 car bombs in Baghdad in a single month, and they were devastating. They were truly horrific," he said.

Two of the deadliest car bombs were detonated last year in the Shorja market that he toured safely Wednesday. The Feb. 12, 2007, attacks killed 175 people and injured 150 more, just two days after Petraeus had returned to Iraq to lead the troop surge.

"The newish-looking building was the one that was blown up," Petraeus said, pointing upward. "It was really terrible."

Petraeus says Al Qaeda in Iraq, the group responsible for the biggest bombings, has been significantly degraded. But the general still calls Iraq the central front in the War on Terror.

"We think right now (Al Qaeda) is still clinging to the idea that they could revive Al Qaeda in Iraq," he said.

But Wednesday, the U.S. military in Baghdad released details of intercepted communications that commanders said were made between Al Qaeda No. 2 Ayman al-Zawahiri and Al Qaeda leadership in Iraq. The group reportedly complained of being unable to raise money, recruit or receive support from locals.

"No support for Al Qaeda" is something Petraeus says he hears in conversations every day, and numerous times in the Shorja market.

"You give us our freedom, and we will give you our friendship … peace with you," one local told Petraeus in the market Wednesday.

In a sign of a shift in Washington, President Bush announced earlier this week his plan to order 8,000 troops out of Iraq by February, and redirect a battalion of about 1,000 Marines to Afghanistan instead of Iraq.

At the end of Petraeus’ market tour Wednesday, the commander ran into an Iraq traffic cop, who said he wrote three tickets that day --one for an expired tag and two for drivers not wearing seatbelts.

That is what Petraeus wants to see.

The general thinks results on the ground will trump any talk in Washington or on the campaign trail.

He says he has mixed feelings as he leaves Iraq. But asked what he would do if someone stepped in and told him the military was on the wrong track in Iraq, Petraeus again expressed confidence.

"In truth I honestly doubt that that would happen," he said.