Though its difficult to get accurate info on the anthrax attacks here, I've seen it reported that there was a definite sequence in how dangerous each next letter was. That sounds like a sequence of warning shots to me. How much damage could Iraq do here if it had a few hundred moles ready to start spreading anthrax, smallpox, etc. by a variety of vectors?
For years the US and the USSR avoided attacking each other because of Mutual Assured Destruction. Perhaps we are now at that same impasse with Iraq.
Smallpox could panic the country and result in quarantined areas, not good. Anthrax would not be as bad unless it start turning up in food.