Northern half controlled by ISIS? What? ISIS hold a single city in the North: Mosul. They have operational zones in Baiji, Kirkuk, Tikrit and areas of Anbar. The South isn't decided by Sunnis vs Shiites because the South is overwhelmingly Shiite.
I'd argue that Iraq's democracy, where power is strictly divided and minorities have guaranteed representatives - including a minimum quota system for women in parliament - is more democratic than the two-party "Supreme Leader" system the U.S has going on. But that's a different story.
Very few insurgent groups take and occupy territory in the way that conventional military forces do. When discussing the influence of insurgents, it's more worthwhile to talk about the territory through with they can travel and operate unimpeded. By that metric, IS does "hold" almost half of Iraq, in that they can travel throughout most of Northern Iraq without fearing attack from the Iraqi or Syrian militaries [1].
I'd argue that Iraq's democracy, where power is strictly divided and minorities have guaranteed representatives - including a minimum quota system for women in parliament - is more democratic than the two-party "Supreme Leader" system the U.S has going on. But that's a different story.