The Mahdi Army is Iran’s major proxy in Iraq. It is, in effect, the Iraqi branch of Hezbollah.
The Iranians know what they’re doing. Lebanon was their proving ground. The Revolutionary Guards built Hezbollah from scratch along the border with Israel and in the suburbs south of Beirut during the chaos of civil war and Israeli occupation. In Iraq they’re simply repeating the formula, only this time more violently.
I've seen it repeatedly asserted that Sadr is an Iranian tool, usually by right-of-center types who are trying to gin up a war with Iran, but have never seen any evidence for it, and Totten offers none. Most of the reporting I've seen from Iraq doesn't support that contention, and my own research on Sadr and his movement strongly argues against Sadr's being an Iranian agent.
The problem here is that Totten throws his assertion into the middle of some actual reportage, and then Powerline parrots it, and on up the food chain until it's simply an article of faith among conservatives, just like the Saddam-al Qaeda connection and the WMDs to Syria nonsense, to be folded into the larger argument for war with whomever, all the time. (In one of those delightful examples of unintentional irony that continually crop up like leafy spurge amid the defiant know-nothingism of rightwing blogdom, a later Powerline post is entitled "Never let the facts stand in the way of a meme." Heh, indeed.)
I don't think it's correct that the Pasdaran (Iran's Islamic Revolutionary Guard Corps) built Hezbollah from scratch. The Pasdaran trained and indoctrinated several breakaway extremist Lebanese Shia factions which became Hizb 'Allah ("Party of God.") The claim is even less true of the Mahdi Army, which developed, like Muqtada's entire movement, out of the clerical activism of Muqtada's father, Grand Ayatollah Muhammad Sadeq al-Sadr. A central element of the elder Sadr's program, and now Muqtada's, is opposition to Iranian influence. While his pro-Arab nativist rhetoric has alienated Muqtada from a significant portion of Iraq's Shia clerical hierarchy, many of whom, including Grand Ayatollah Sistani, are of Persian origin, it has endeared him to Iraq's Arab Shia underclass, which is where he finds his greatest support.
If any group can be said to have been created by the Pasdaran "from scratch," it is the Badr Brigade, the militia wing of SIIC (formerly SCIRI), formed out of Iraqi exiles and defectors, and POWs from the Iran-Iraq War. It is the Badr Brigade that continues to serve as "Iran's major proxy" in Iraq, constantly battling the Mahdi Army for control of Shia neighborhoods in southern Iraq. However, Abdel Aziz al-Hakim, head of SIIC (and former commander of the Badr), is now George W. Bush's friend , so it won't do to point this out.
This isn't to say that Sadr receives no Iranian support, he certainly does, as do various groups in Iraq, directly and through proxies. After their offers to help stabilize Iraq were rebuffed by the Bush administration, elements in the Iranian government clearly foresaw the coming chaos, and starting hedging their bets, getting their fingers into different pies, betting on various horses to win, and mixing every possible metaphor, as a way to produce the best possible outcome for Iran. It is true that Sadr admires and emulates Hezbollah. Like them, he has fashioned a political identity that combines sometimes contradictory elements of populism, nationalism, pro-Arabism, and pan-Shiism. The tendency of some to elide these elements in favor of a "Iranian tool" narrative indicates a failure to appreciate some of the complexities of Iraqi-Shia identity, and, of course, an attempt to gin up a war with Iran.
There is one thing Sadr and Iran undoubtedly do share, however. The U.S. has effectively done for Sadr in Iraq what we've done for Iran in the wider Gulf region: Pursued a series of policies which seem to have been designed in a lab to facilitate his becoming the dominant actor.
Update: Eric Martin has some other observations.