It’s another scorching day in Medina Wasl, a small market town in the desert outside Baghdad. I’m walking down the dusty main street, trying to ignore Arabic pop music blaring from a cafe, watching women barter for sizzling kebabs and getting a few sharp looks from the men sitting around smoking or playing backgammon.

Then all hell breaks loose. A roadside IED (improvised explosive device) detonates in a spray of shrapnel that rattles my UNemblazoned Kevlar helmet. The screams that follow aren’t all in Arabic. The bomb’s target, a US army Humvee, lies shattered. One soldier is staggering around, waving his M16. Another writhes in agony nearby having lost both his legs. The bitter taste of gunpowder fills the air as Iraqi civilians either rush to help friends caught in the blast or evaporate into side streets.

As if by magic, the cavalry arrive. Literally. The armoured Humvees and tank-like Bradley infantry fighting vehicles of the 3rd Brigade, 1st Cavalry Division, sweep into the town centre, braving sniper fire and angry locals to treat their injured comrades. Medics leap into action and gunners rake a nearby hotel with large-calibre machineguns. Then, with a final roar of their engines, the Americans load their wounded and leave the devastated scene behind them.

I can almost hear the director call “Cut!” As the Humvees growl away, “injured” Iraqis stand up and smile at each other. Technicians in fatigues carry fire extinguishers over to the smouldering Humvee and muttering officers behind me start dissecting the American soldiers’ performance.

This isn’t really a town near Baghdad. It’s not even Iraq. It’s the US army’s National Training Centre (NTC) at Fort Irwin in California, and I’ve just taken part in the most realistic paintball game in the world. Or as NTC commander Brigadier-General Dana Pittard calls it, “an interactive, combat-focused Broad-way play”.

Until 2003, Fort Irwin mainly hosted “force on force” training operations. Its remote location offered the space (if not the climate) to simulate the sprawling cold war tank battles the US army expected to fight in Europe. An entire US regiment, the 11th Armoured Cavalry, adopted Soviet uniforms and tactics to become Fort Irwin’s resident “opposing force” – Opfor for short.

Then the Iraq war happened. Since March 2003, more than 4,100 US soldiers have been killed and over 30,000 wounded in a war the army simply wasn’t prepared for. Suicide bombs, IEDs and snipers wrought havoc in regiments that were ill equipped for urban warfare. Civilians suffered too, as troops with little understanding of local languages and culture sometimes adopted heavy-handed tactics.

The solution? Create a fake Iraq where soldiers could learn and make mistakes without adding to the casualty figures. And so the idea of the “Iraq simulation” was born – 13 typical Iraqi (and Afghan) villages scattered across the Mojave desert at Fort Irwin. The villages would offer troops a range of realistic training scenarios, from foot patrols to clearing underground caves.

Fort Irwin’s first Iraqi villages were little more than a collection of hurriedly painted garages and barns purchased from nearby retailer Shed World. Few of its Opfor soldiers spoke Arabic and all looked far too clean-cut to pass for Iraqi insurgents.

The army needed more realism, it needed it quickly and it had money to spend – so it turned to Hollywood, 200 miles down the road. Construction co-ordinators from Paramount Pictures sprayed stucco onto shipping containers to create instant shops, houses and mosques.

Set dressers then added “texture”: broken-down Toyota pickups, plastic vegetables and meats for stalls, authentically battered cafe tables and even Arabic graffiti.

The army even relies on Hollywood for pyrotechnics. The roadside bombs, for instance, contain only about as much gunpowder as a firework, but are designed to give the maximum bang for the army’s buck – including cork shrapnel for realism.

The latest improvements even use open cooking fires, live goats and donkeys to give Medina Wasl an authentic smell. Sergeant Thavone Phavivong of the 3rd Brigade has been to Iraq twice and vouches for the realism of what troops call the Lanes: “Exercises in Medina Wasl gave me flashbacks to when I was a gunner in a convoy over in Iraq. Over there, there are huge crowds, civilians are all over the battlefield. Everyone is coming towards you and they’re simply not afraid of us. NTC gives that experience over here.” Just about the only thing missing, he says, are dogs running around, an impossibility in the Mojave as they would get eaten by coyotes.

Phavivong, like the 50,000 other soldiers “processed” through Fort Irwin every year, is “getting his head into Iraq space”, drill slang for acclimatising to the conditions where you sweat 24 hours a day in daytime temperatures of 40C and in the knowledge that you could fall victim at any second to an IED or a sniper’s bullet.

Phavivong is hoping that the Iraqi conflict is entering its final straight. He was in the middle of his second tour in Baghdad last year when he heard that his fiancée back home in Minnesota was pregnant. He knows that every tour shortens the odds of getting injured or killed. Once he’s fully into combat mode, it will be as hard to reenter life in suburban America as it is getting used to conditions in Medina Wasl. “When I went back to the States [after my first tour], it was like I was in the future,” he says, recalling his homecoming. “Everything was new and different. I took a little time to see each and every one of my family and friends - you never know when the next time will be.”

To simulate the conditions of a real Iraqi town, Medina Wasl is populated by 2,000 villagers, in reality either Opfor soldiers or unemployed locals from nearby Barstow. All speaking roles are handled by an ensemble of 250 Arabic actors and émigrés. They live on base for weeks at a stretch, playing the parts of Iraqi imams, mayors, shopkeepers and housewives. The men and women (there are no children, for safety reasons) come from all over the Middle East.

Some have fled conflict themselves, others are comfortable Arab Americans who simply enjoy the wages of around $4,500 (£2,430) for two weeks’ work. For 12 hours a day, they live and breathe the roles of Iraqi villagers, wandering back and forth through the streets, selling clothes and cigarettes to each other over and over again, and screaming hysterically as the same Humvees “explode” every couple of hours.

Another group of actors is even more unsettling. Make-up artists provide buckets of fake blood, and the US army victim of the Humvee bombing I witnessed was played by a genuine double amputee, whose simulated wounds are gory enough to make some trainees sick.

“When the IEDs go off and you see the amputees, it really makes it feel real,” says Phavivong. “It can be hard when you see injured civilians, but we’re taught that our first priority is our soldiers. And with all the people around, it’s not easy to make a positive identification of hostiles.”

The “hostiles” are members of Opfor, US soldiers playing Iraqi terrorists and insurgents - anyone who might have to fire a gun, mortar or rocket-propelled grenade They are trained to use the same tactics used by real insurgents, and even benefit from acting lessons given by Carl Weathers, star of Predator and the Rocky films.

That’s because each of the 112 possible major events (or “iterations” in army speak) has a fully fledged script, with individual speeches, motivations and actions planned out. Not every iteration is “kinetic” (with bullets and bombs); many simply involve talking with Iraqi authorities or patrolling tense situations. What happens over the course of the 14-day training period depends on how a unit behaves from day to day.

If US troops storm a calm village, kicking down doors and shooting on sight, for instance, they’ll face snipers and IEDs the next time they visit. If they hire an interpreter (using real dinars shipped over from Iraq) and respect local customs, though, they might just learn about an Al-Qaeda cell shipping guns into the area.

Managing such multi-threaded sto-rylines takes more than a single director. So the Lanes has 310. These observer/ controllers (OCs) are the simulation’s referees. Some wander through the villages with the trainees, others monitor the village’s hundreds of hidden video cameras and microphones from the base’s control centre.

Forget the .50calibre machineguns, the armoured fighting vehicles and even the occasional Apache helicopter that flashes overhead, the OCs carry the most powerful weapon of all - the God Gun. This small blue plastic revolver can “kill” anything on the battlefield, from an unarmed civilian to a C-130 transport plane, in a silent flash of light.

All weapons in the simulation are loaded with blanks, but woe betide any fighter who lets their guard down. Every soldier, villager and vehicle in the Lanes wears a harness that is part of a wireless laser tag network called Miles, standing for Multiple Integrated Laser Engagement System. Each Miles harness contains an array of laser receivers, and every weapon (except suicide bombs and IEDs) has a laser emitter. “We really just have a very fancy laser tag warfare system,” admits John Wagstaffe of the NTC.

The Miles network is smart, so if you try to shoot a Humvee with a handgun, nothing happens. If you accurately target a person who is vulnerable and within range, they hear a buzzing sound that means they are hit. An OC then hands them a “casualty card” that describes their injury and whether they can hobble away or fall down dead. Every Miles harness also has a GPS unit that allows it to be pinpointed from the control centre.

The God Gun allows the OCs to simulate the effects of bombs by disabling soldiers and vehicles, or simply to punish foolish tactics. After each iteration has run its course, the soldiers get feedback on their behaviour, discuss the consequences of their actions, and often have to run the exercise all over again.

For the 3rd Brigade, 1st Cavalry Division, the Lanes is the best immersion training they can get. “You know what?” says Sergeant Phavivong with a smile. “I’d love to go through those Lanes again.” But there’s no time for repeats now. In December, the entire brigade deploys to Iraq for a 12-month tour of duty, with no Miles harnesses, no make-up artists and no blanks.