"Terrorists" help U.S. in battle against Islamic State in Iraq

* PKK fighters discover new role in Iraq conflict * Their battle coincides with Turkey peace process * PKK presses U.S., EU to drop terrorist label * Rivalries between Kurdish groups surface By Isabel Coles MAKHMUR, Iraq, Aug 21 (Reuters) - Washington has acquired an unlikely ally in its battle against Islamic State militants in Iraq - a group of fighters it formally classifies as terrorists. ...