The disqualifications drew anger from the secular coalition of Shiite former premier Iyad Allawi, whose strong backing in Sunni Arab areas helped him narrowly defeat Prime Minister Nuri al-Maliki, also a Shiite, on March 7.
In Turkey, Allawi, who has so far failed to turn his election win into a government and has alleged that his supporters have been besieged in an attempt to change the result, said a "dangerous situation" had now developed.
"We have instructed a group of lawyers to object to this decision at the appeals court," he told a news conference in Ankara. "I am sure we will be successful," he said, while casting doubt on the ruling's legitimacy.
"Frankly, we are very worried... the political process is now in the hands of a group of people from the Iraqi judiciary. They pass or reverse decisions to their liking."
The precarious situation was further imperilled when a controversial justice and accountability committee (JAC), responsible for vetting candidates, said it would rule on Tuesday on nine more election winners who could lose their seats.
"The electoral commission has disqualified 52 candidates, two of whom were elected, for their links to the Baath party (of now executed dictator Saddam Hussein)," JAC executive director Ali al-Lami told AFP.
"Tomorrow, they will pronounce on nine other winners," he said.
Hill indicated for the first time on Monday that the timeline for forming a new government was slipping, and said it now "seems it's time to get this show on the road."
"We are now approaching the two-month period (after the election) and we are concerned that the process is lagging," he told reporters in Baghdad.
"We would share the concern of those who believe that it is time that the politicians got down to business and started forming a government."
Any failure to secure a new government in Baghdad could become a major headache for Washington's plans to pull all its combat troops out of the country in August, ahead of a complete military withdrawal by the end of 2011.
"This is not 2005, but Iraqi politicians have to pick up the pace and get through this," Hill said of the six months it took Iraq to form its last government.
One of the two winning candidates who was disqualified was Ibrahim Mohammed Omar, the brother of Saleh al-Mutlak, a leading Sunni politician who was previously barred from seeking re-election.
Both belong to Allawi's secular Iraqiya bloc.
The JAC, which is chaired by Shiite former deputy premier Ahmed Chalabi, was responsible for identifying candidates with links to the Baath party, Saddam's political movement, which ruled Iraq until the US-led invasion of 2003.
"All those disqualified can appeal, but there is little chance that they will succeed," Lami said, in a downbeat assessment for the 52 candidates who have one month to urge seven judges that they should be reinstated.
Lami did not name the list to which the second successful candidate who was disqualified belonged, but said that 22 belonged to Iraqiya and the remaining 30 were in different parties.
Monday's decision was taken by a three-member judicial panel established by the Independent High Electoral Commission (IHEC), the election organisers.