To mollify Iraq's Kurds, who had placed great stock in the TAL, Allawi agreed to "apply" it for the duration of his government. He has turned down Kurdish requests that it be enacted into law. And even if he did enact the TAL, he cannot commit the elected assembly that will follow his interim government to accepting it. For the Kurds, the most important provisions of the TAL were precisely those that ensure the continuation of a secular and democratic Kurdistan even after the national elections.
How did the Bush administration invest so much in the TAL and then find itself forced to abandon it? It appears that Bremer never realized that his decrees would not legally outlast the occupation. It was a rookie's mistake caused, as with so many other CPA failures, by the lack of expertise on the part of his staff. The TAL was largely the responsibility of two of Bremer's assistants (dubbed "the west wingers"), one an extremely capable but relatively junior Foreign Service officer and the other a young political appointee from the Pentagon's stable of neoconservative nation-builders. Imbued with grand ideas such as remaking the Iraqi judiciary with a US-style Supreme Court, they apparently neglected to consult an international lawyer.
Bungling the basic law (while claiming credit for said law) is about par for the course for the record of incompetence and dishonesty that is the Bush raj's only real claim to fame.