McChrystal's background is in clandestine ops. I don't see it as retreat, I see it as smart warfare. Yes people do die, but it is also the military's goal to minimize civilian casualties. With media reporting the way it is, commanders are forced to fight two battles. One with the enemy, and the other with public opinion of the nation being occupied. I am quite sure that when the order was given to minimize civilian casualties through retreat if nescessary, that this public view was taken into consideration.
The enemy is already using civilians as cover, nothing has changed in that fact. Urban warfare is much different than just kicking in doors and opening fire. So much to think about before pulling the trigger. He didn't say NOT to fire if fired upon, he said that if civilian's were in the immediate line of fire, to "fall back" and regroup..in a nutshell. To me, that is just a little smarter. We aren't throwing in the towel, we are simply changing the way business is done in order to keep the media from portraying us as "baby killers." At least that is my take on the whole thing.