A "fairly" good reason? Are you kidding? "Fairly good?" How would you like to be held, blindfolded, and roughed up for days, weeks, months, YEARS, for a "fairly good" reason?
His house had IEDs, insurgent propaganda, and a known insurgent inside. That's enough to get one arrested, confined, and tried in the US and most other countries. And he wasn't released because he was cleared of the charges against him, but because an Iraqi court decided that he was covered by an amnesty law.
The legal side of things gets more complicated when you have the military legal system and the Iraqi legal system trying to work together. My personal experience with detainees in Ramadi is that prisoners in American custody are treated much better than those in Iraqi custody. I've personally treated detainees being transferred from the Iraqi Police to American custody who were beaten until most of their upper body was a mass of bruises, and the anecdotal evidence I have is that such treatment is common for suspected insurgents captured by the Iraqi Police. For that reason, there is often reluctance to transfer prisoners from American custody over to the Iraqis, especially if the individual is suspected of terrorist activity in the area. There's a good chance that the Iraqis will take out their frustrations on the detainee.
The other thing to keep in mind is that there is a war going on over there, and civilian peacetime rules of jurisprudence are not really applicable. In war, it is entirely appropriate for captured enemy fighters to be detained until the end of hostilities, and there is no requirement under the Geneva Convention or any other legal system for such individuals to be charged with or convicted of anything. The "prisoner of war" categorization is not limited to uniformed enemy soldiers:PART VII
APPLICATION OF THE CONVENTION TO CERTAIN CATEGORIES OF CIVILIANS
Art. 81. Persons who follow the armed forces without directly belonging thereto, such as correspondents, newspaper reporters, sutlers, or contractors, who fall into the hands of the enemy, and whom the latter think fit to detain, shall be entitled to be treated as prisoners of war, provided they are in possession of an authorization from the military authorities of the armed forces which they were following.
According to this, and and the reasonable suspicion of Mr. Hussein's insurgent activities, treating him as a prisoner of war instead of a civilian criminal is entirely justifiable and appropriate. The notion of prosecuting capured enemy combatants under civilian criminal law is actually quite a new phenomenon; in previous conflicts, enemy fighters captured engaging in hostilities while not in uniform were generally subject to execution after minimal legal preceedings:The penal provisions promulgated by the Occupying Power in accordance with Articles 64 and 65 may impose the death penalty on a protected person only in cases where the person is guilty of espionage, of serious acts of sabotage against the military installations of the Occupying Power or of intentional offences which have caused the death of one or more persons, provided that such offences were punishable by death under the law of the occupied territory in force before the occupation began.
In most previous conflicts, individuals found in Mr. Bilal's situation were shot on the spot. Manufacturing IEDs (or allowing their manufacture in his house), harboring known insurgents, and giving information to the enemy would all qualify Mr. Hussein for the death penalty, and would certainly justify his confinement. His status as a prisoner of war means that there is no legal requirement to bring charges against him; he can be detained as long as hostilities are ongoing.
As far as I'm concerned, Bilal Hussein should feel fortunate he escaped execution.