Eleven other bodies were found near Lynch in the Nasariyah hospital. Navy Capt. Frank Thorp, a U.S. Central Command spokesman, said there was "reason to believe" that some of the victims were American. Forensic tests were to be carried out on the bodies.
Lynch, 19, was seized by the Iraqis after her unit, the 507th Maintenance Company, made a wrong turn March 23 and was ambushed in the Euphrates River city of Nasariyah. A dozen other members of her unit remain unaccounted for, including five listed as prisoners of war.
CBS News Correspondent Bob Fuss points out Lynch was not one of the POWs shown on television, and had not been officially listed as a prisoner, but as missing in action.
Lynch, with broken bones and possibly gunshot wounds, is heading to Landstuhl military hospital in Germany for treatment.
The Marines staged a diversionary attack south of the city, reports Mike Kirsch of CBS station WFOR-TV, while the Special Forces, carried by helicopter, went into the Saddam Hospital.
An Iraqi pharmacist who works at Saddam Hospital told Britain's Sky television that he treated Lynch for leg injuries, but that she was she was otherwise healthy and that "every day I saw her crying about wanting to go home."
The pharmacist, who gave his name only as Imad, told the TV network that Lynch knew the U.S. troops were on the other side of the Euphrates River and "she kept wondering if the American Army were coming to save her."
After POW rescue failures in Vietnam and Iran, the military now has a special rescue force, said CBS News Analyst Perry Smith, a retired general.
"They know how to get in there with deception with a lot of night activity and grab somebody," he told CBS News Early Show co-anchor Harry Smith. "It's a wonderful story.
"We're getting a lot of intelligence from the natives who are happy to see us," the retired general added. "That is really helpful in finding the enemy and finding these hostages."
The story of saving Lynch cheered a White House consumed with the overall war effort, reports CBS News Correspondent Peter Maer. A senior official said President Bush had a two-word reaction, "that's great," when Defense Secretary Donald Rumsfeld gave him the news during an early evening briefing.
"Everybody here (at the White House) felt very good when they got the news and it is good news," the official said.
The official noted the good news is tempered by the knowledge that there are still other POWs about whom the President cares deeply.
Later, spokesman Ari Fleischer described the rescue as "the heart and soul of the American military taking care of the American military."
The rescue tells the families of other POWs that "hope is out there," Lynch's brother Greg said. "They're out there trying to get to them," added her father.
The 507th was attacked during some of the first fighting in Nasariyah, where Fedayeen loyalists and other hardcore Iraqi fighters have dressed as civilians and ambushed Americans.
Not long after the ambush, five of Lynch's comrades showed up in a video shown on Iraqi television being asked questions by their Iraqi captors.
The video also showed bodies, apparently of U.S. soldiers, which led Pentagon officials to accuse Iraq of executing some of its prisoners. Officials believe the video was made in the Nasariyah area.
Lynch, an aspiring teacher, joined the Army to get an education, her family said. She left a farming community with an unemployment rate of 15 percent, one of the highest in West Virginia.
More than 70 people gathered at Lynch's parents' home in the small farming community after the Pentagon announced the rescue.
"I think everybody heard all the screaming and shouting that was going around" after he got the call, said Lynch's father.
"Everyone was excited and happy to hear the good news," said Lynch's hometown friend Jenny Baileys on the CBS News Early Show. "We were all jumping around partying."