In the last few days there have been a number of calls for international intervention to try to stem the atrocities that the Qaddafi regime is carrying out against Libyan civilians, including military measures such as the imposition of a no-fly zone. (Sanctions and other steps have also been proposed, but I doubt that they would have much impact on a regime fighting for its life).
We might be past the point where the declaration of a no-fly zone would make a major difference -- the Libyan air force (that part which has not defected) does not appear to be terribly effective and airlifted mercenary forces in the east seem to be contained. The city of Tripoli and several other towns on the west coast do appear to be at the mercy of loyalist mercenaries and militias, and are suffering terribly, but there is probably little that could be done militarily, short of a massive and prohibitively problematic amphibious invasion, to rescue them. Rebels in Benghazi are reportedly beginning to mobilize to move west, so it's quite likely that Libyans will be able to complete the overthrow of Qaddafi without outside help.
However, dictators have come back from the brink before: Saddam in 1991, for example, although his hold on the country was probably never as tenuous as Qaddafi's is right now. If there is any chance Qaddafi were to stage a major turnaround, and bring major rebel-held cities like Benghazi or Misrata under siege, then the United States and other powers capable of intervention in Libya should consider what might be done to prevent a terrible humanitarian disaster.
Here are a few thoughts, both for and against intervention, mostly extrapolated from my experience in Iraq. I have focused here on the likely local impact on Libya, as opposed to issues of legality or sovereignty, of precedent, or of any larger strategic or historical picture.
1) Little is known about what would emerge from a post-Qaddafi Libya, but a Qaddafi victory would be absolutely dismal. Firstly, the behavior of regime loyalists in Tripoli suggests that there would be terrible reprisals. Secondly, it would probably many dark years ahead for the people of Libya. A people who have been crushed once tend not to rebel again, at least not in the form of mass urban uprising, for some time -- a decade, perhaps for as much as a generation. (Prolonged guerrilla warfare is different, but that has all kinds of other nasty fallout).
The world could not possibly return to business as usual for Libya after a Qaddafi victory, but ironically treating a nation as a pariah frequently only appears to strengthen the regime in place. The public begins to resent the outside world, while elites begin to scale their ambitions to what the regime can provide locally. This removes an incentive in future crises to remove an oppressive leader so as to remain international citizens in good standing. (I am thinking Saddam's praetorians contrasted with Mubarak's, here).
2) A no-fly zone would probably not suffice to prevent major assaults on rebel-held cities, should they materialize. Maybe aircraft flying threateningly overhead would be enough to deter regime assaults. But if it doesn't, then even a small number of tanks and artillery pieces can make it very difficult for defenders to hold ground, and we don't know if rebel armor is operational. An intervention force would probably need to be prepared to strike ground targets, like the Bosnian Serb artillery positions hit in 1995, to provide any sort of guarantee for the defenders of rebel-held cities. This could lead to any number of terrible errors -- it might be extremely difficult to judge from the air, from context, whether any given vehicle column were moving to attack a rebel-held city, or moving to its relief.
3) Iraq is doubtless what comes to mind when one contempates Western military intervention in the Arab world. But intervention in Libya would not necessarily be a repeat of Iraq, or rather, it would not be Iraq 2003. Rather, it would be Iraqi Kurdistan in the summer of 1991, or Bosnia in 1995. An invasion that comes at a time of relative calm, on the invader's timetable, is terrifying even to those who loathe the incumbent regime. An intervention that targets an imminent threat, which alleviates fears rather than triggers new ones, may be seen very differently.
4) Any foreign incursion into Libyan land or airspace risks tainting the rebellion as foreign-backed. Most battalions in the Libyan military do not appear to have committed to either side. Some units may see international aircraft overhead, conclude the jig is up for Qaddafi, and commit to the rebels. But that's an optimistic view. Libyans troops in uncommitted battalions might be very isolated at this point. Their perceptions of what is going on right now might be very different from the international narrative. Some officers who deeply desipise Qaddafi might nonetheless fight against any transgression of national sovereignty -- perhaps calculating, as Iraqi officers did after 2003, that participating in a national struggle was a better investment in their political futures than "collaboration." (Some officers who have defected to the rebels have cited Qaddafi's use of mercenaries as a decisive factor). Also, a regime which falls completely due to the efforts of its own people, rather than to the work of foreigners, would be more likely to lead to its moral collapse -- ie, you would be less likely to have Qaddafi revanchists threatening other Libyan factions in the future.