Actually, I think Saddam's figured out a way to take Turkey out of the war and seal off his northern border. First, check out this thread, where we learn that Saddam is clearing a 20-mile no-man's-land between the Kurdish-controlled regions and Iraq proper. Now, Saddam doesn't care about civilian casualties, so keeping US and Turkish troops from intermingling with Kurdish civilians is irrelevant to him—Iraqi troops will fire at will regardless. Clearing out a buffer zone helps us, not Saddam, because we're the army that fights under rules of engagement.
Second, see this report of Iraqi troops on the Kurdish border receiving gas masks and "injector kits." Gas masks are useless against any meaningful chemical weapons. Nobody knows what's in these "injector kits," but it probably isn't atropine—that's not worth the bother without full chemical protection gear, since it only buys you about five minutes to reach safety. So the Kurds' assumption that Saddam is planning on gassing them again doesn't really hold up.
But there's one scenario in which both reports make sense: Maybe Saddam is going to trigger a smallpox epidemic among the Kurds. A civilian-free buffer zone serves as a firebreak or quarantine, preventing any infectious civilians from migrating south and spreading disease among the Iraqi population. Gas masks are useless against nerve gas, but they work just fine to protect the troops enforcing the quarantine from airborne pathogens like smallpox. And those injector kits might contain smallpox vaccine for emergency use on select Iraqi civilians—smallpox vaccine can actually work even when administered after exposure. Heck, those injector kits might contain live smallpox to use on civilians as they evict them.
A smallpox outbreak among the Kurds would secure Saddam's northern flank. First, it would cripple logistics in the Kurdish regions, where we're planning on putting forward air bases. Second, it would generate a massive refugee movement northward, throwing what roads there are into complete chaos. And third, it would quickly spread into Turkey, with all the obvious effects on the Turkish military and civilians.
And there's basically no downside for Saddam at all in this. The Kurdish border, running along the northern "no-fly zone" line, is already militarized, so the quarantine will be easy to establish. He can spread smallpox among civilians quite stealthily, using martyrs, unwitting dupes or released prisoners. Without the "smoking gun" of a biological warhead or a crop-duster overflight, the US would have a hard time making the case for nuking Baghdad, so Saddam has every reason to think he can get away with it. And unlike a "conventional" biological or chemical weapon attack, which must be executed by front-line commanders unwilling to risk our likely response, this would be carried out by his personal guard and/or the Mukhabarat, who are more loyal and less afraid of retaliation.
In short, it seems to me that if Saddam doesn't do this, it's because he just plain doesn't have any smallpox.
Especially as the refugees are expected to head northward into Turkey. I hope for Turkey's sake that this scenario has been analyzed and that stocks of vaccine are made available ASAP.