This is bad. Definitely bad.
I had kind of predicted it way back when. The Kurds' independence was going to be seen as an open invitation to try to carve an independent Kurdistan out of Turkey, Iran and Iraq, and there was absolutely no way that Turkey would go along with it.
What I wasn't expecting was that the PKK would engage in such nakedly terroristic activities that Turkey would be able to justify what they were doing. I had thought that mild expansionism would bring a nasty crackdown. Instead, we get the PKK kidnapping soldiers, killing civilians, and in general driving the Turkish people into frenzied screams for Kurdish blood.
(Kind of reminiscent of the Israel-Hezbollah brouhaha, but without the actual state existing, like in Lebanon.)
Then again, why wouldn't the PKK do exactly what they're doing? They're counting on the U.S. to prevent any real sort of retaliation, and it looks like they're getting their wish. The Americans don't want to see Turkey go into Kurdish Iraq in a big way, because they don't want the single success story of the war to collapse in war. They especially don't want pessimists like to have been right (again) and so are going to work to try to keep the peace in Iraq. What does the U.S. care, except perhaps in the broadest of terms, about what's going on in Turkey, compared to the security of their pet state in the region?
Besides, Turkey doesn't want to lose its western trade relations. The U.S. knows this. That's a huge stick to keep the Turks in line, one that America will be relying on, and many Americans might think is decisive. It won't affect the PKK, though; like all the best rebel groups, they've got a primary resource to rely on, and they can be sure the trade will come to them, no matter what the U.S. says. America can hold back the Turks, but it can't hold back the PKK.
Where this ends, I'm not sure. Turkish elites really won't want to antagonist the U.S., but they may not have a choice. The Turkish people are already incredibly angry, and at some point, the regime itself might be in some amount of danger, and will act. No matter the cost in trade.