The threat is real.  From this morning's New York Times:

LONDON, Sept. 2 – British police arrested 14 men in south, east and north London on Friday, raiding a halal restaurant and an Islamic school in the latest display of concern about the spread of terrorist activity in Britain.

Separately, police in the northwestern city of Manchester said they arrested two men today in raids on three homes.

Police said neither incident was linked to the huge security alert that began on May 10 when police rounded up 24 people to thwart what they called a terrorist suicide plot to bomb trans-Atlantic airliners.

Cutting and running from the threat in Iraq will not end the threat in Great Britain, the U.S. or anywhere around the globe.  Blinding NSA won't help us either.  It is all one war, and the sooner you put aside political ambition in favor of national security, the sooner both will be better served.

UPDATE: From the Times of London news scroll:

Britain : last updated, September 02, 2006 12:56

14 arrested in anti-terror raids
Police have arrested 14 men in a series of dramatic anti-terror raids targeting the alleged recruitment, training and encouraging of people to take part in terrorist acts. The men, who are thought to be mainly young British Muslims of Pakistani origin, were held in London, with several arrested at a Chinese restaurant in the Borough area of the city. Detectives are carrying out searches at at a large number of residential properties across London - running into double figures.

Police search Islamic school
Police are continuing to search a location in Mark Cross, East Sussex following the 14 arrests in London. A spokesman said: "We are conducting a search in East Sussex in relation to the arrests."It is reported that about 100 officers are examining what is believed to be an Islamic school near Crowborough.

'Thousands' tracked in terror probe
Police are trying to keep tabs on "thousands" of people in Britain who may be involved directly or indirectly with terrorism, one of the country's most senior anti-terror officers has disclosed. Peter Clarke, head of Scotland Yard's Anti-Terrorist Branch, said Britain was facing an increasing homegrown extremist threat. In an interview with the BBC, Mr Clarke refused to put an exact figure on the number of terror suspects operating within the UK, but gave a stark warning about the scale of the task facing Britain's security agencies. 

UPDATE:  The Daily Mirror previews a special on the BBC tonight which should penetrate even Barbara Boxer's foggy thinking.  We aren't creating terrorists in Iraq.  The manufacturing process began long ago, and in one case noted at the end of this excerpt, the terrorist nested in Great Britain went to Iraq to "blow himself up":

THE number of people plotting terror attacks or actively supporting them now runs into thousands, Scotland Yard warns.

The chilling revelation is made by the head of the Anti- Terrorist Squad in a TV programme to be screened tomorrow night.

Deputy Assistant Commissioner Peter Clarke tells the BBC2 documentary Al Qaeda - Time to Talk: "What we've learned since the attacks in America on 9/11 is that threat is not something that's simply coming from overseas into the United Kingdom.

"What we've learned and what we've seen all too graphically and all too murderously is that we have a threat which is being generated here within the UK."

Asked how many British Muslims he thought were involved in planning attacks or helping home-grown terrorists he replies: "I don't want to get into the numbers game, I don't think it's helpful.

"All I can say is that our knowledge is increasing and certainly, in terms of broad description, the numbers of people we have to be interested in are in the thousands.

"That's in total, but as I say, that includes a whole range of people, not just terrorists, not just the attackers, but the people who might be tempted to support or encourage or assist."

The programme also highlights the cases of foreign terrorists who have set up base on British soil.

They include the French Algerian suicide bomber Idris Bazis, who moved to Manchester after training to become a "jihad warrior" in Afghanistan.

He lived in Manchester for two years before blowing himself up in Iraq.

If Badris hadn't tried to kill in Iraq, it is logical to assume he'd have tried someplace else.  The oft-made point about fighting the terrorists in Iraq so we won't have to fight them in New York or Washington finds one concrete example here.