A big part of me agrees with you, but consider this:
That might not be an offer Hussein wouldn't refuse.
Remember the "War of the Cities" between Iran and Iraq in the 80s? That was initiated by Iraq.1.5 million civilians died on both sides. Those are what Hussein considers "acceptable losses."
These anthrax attacks are escalating. We know Hussein has more. We know he has smallpox. We suspect he has Ebola.
We know he has chemical weapons. We suspect he has nukes.
We are either being provoked, or warned. Hussein either wants a fight, or wants us to butt out while he goes after other objectives: Kuwait, Saudi Arabia, Jordan, and Israel.
Hussein believes he is the reincarnation of Nebuchadnezzar, the Sacker of Jerusalem, Captor of the Jews, and the Great conqueror of Babylonian history. He's not dealing with a full deck, but he has dangerous aces up his sleeve.
This is World War III. Not sure I wouldn't give Hussein the nuclear ultimatum you suggest, maybe in concert with Russia. But it's also time to start playing our "I" cards.
Israel...
India...
Iran.