By the time that was figured out, we had the insurgency. Then Bremer was replaced. Lots of mistakes are made in war. Look at WWI, WWII and Korea.
It's aggravating because it's so bloody obvious. We contacted them before the war, bribed some of them not to fight and promised that they'd either keep their jobs and/or get a generous retirement. Then we threw them out in the street during the equally idiotic "DeBaathafication" phase of the occupation.
Given how costly the Sunni insurgency has been, in the long run it might well have been cheaper to export the officers and their families to retirement homes in the Caribbean.
What I'm wondering now is if these bozos asking for pensions now are just homebodies who aren't connected to the Sunni insurgents, or if they're a stalking horse for the officers who did join the insurgency.
The first idea that comes to mind is to give them decent-paying jobs training troops in the new Iraqi Army and see where that leads.