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The crisis may have sown the seeds of distrust between Iraq's Shia-led government and Egypt -- an Arab powerhouse whose goodwill Iraq needs.
It also underlined the unease with which the Arab world has watched political developments in Iraq since the fall of Saddam Hussein, who like most Arabs is Sunni.
Arab states have reluctantly lent their support to Iraq's postwar rulers, while casting doubt on their independence and expressing worry at the new dominance of the Shia majority and the Kurds, who combined form 80 percent of Iraq's estimated 26 million people.
Al-Qaeda in Iraq, led by Abu Musab al-Zarqawi, claimed responsibility for the kidnapping of al-Sherif. On Thursday an al-Qaeda statement posted on the Web said he had been executed. But, contrary to past practices, there was no videotape of the killing.
Al-Sherif's killing, if true, would mark a dramatic escalation in the insurgency's campaign to isolate Iraq diplomatically in the Arab and Muslim worlds. Earlier this week, gunmen fired on senior envoys from Bahrain and Pakistan, apparently with a view to kidnapping them.
Al-Sherif's case also may have strained Iraqi-Egyptian relations at a time when Prime Minister Ibrahim al-Jaafari's government needs the cooperation of its Arab neighbors, primarily to stop the flow of Arab militants seeking to join the insurgency.
Already, before al-Sherif's apparent slaying, Iraq's government had suggested that the diplomat was partly to blame for his abduction. It also indirectly accused him of secret contacts with groups in the Sunni-dominated insurgency.
Iraqi Interior Minister Bayan Jabr said some Arab diplomats in Iraq were in
"So, he takes responsibility for what happened," said the minister, a hardline Shia Muslim from the Supreme Council of the Islamic Revolution in Iraq, the country's largest Shia party and the senior partner in al-Jaafari's ruling coalition.
The minister spoke on al-Jazeera television Wednesday, a day before al-Qaeda in Iraq announced the Egyptian's death.
Most Arab states, as well as the United States, are encouraging contacts between the Iraqi government and moderate insurgent groups in the hope of finding a negotiated end to some violence.
But there has been growing opposition among Shia legislators to such contacts. And some in Iraq have been disappointed by what they see as the silence of Arab nations over the bloodshed in their country.
For its part, Egypt placed some of the blame on Baghdad, with Foreign Minister Ahmed Aboul Gheit saying Thursday that "some responsibility rests with the host state."
The foreign minister, together with the Grand Imam of al-Azhar, Sunni Islam's highest seat of learning, appealed Thursday for al-Sherif's release. But neither condemned the abduction or referred to the culprits as terrorists, something that would not escape the Iraqi government's notice.
Egyptian President Hosni Mubarak, however, said al-Sherif's killing would amount to a "terrorist act." Late Thursday, an Egyptian official said Cairo will temporarily close its diplomatic mission in Baghdad, and has recalled its staff.
Some Sunni Arabs in Iraq were also unhappy with their government's position toward Arab neighbors.
"The Iraqi government must tone down its rhetoric," said Ayham al-Samarie, a Sunni Arab Iraqi politician who arranged meetings last month between U.S. officials and insurgency groups. "We need all the help we can get from Arab nations."