Nukes--as you yourself have pointed out--make American projection impossible. They immediately remove us from the M.E. They give Saddam de facto control over some 20-35% of the world's known oil reserves. They place the Arabs in the catbird seat between the US and our rising global rival, China. They seriously damage Russia's position in Central asia, and may even cut us off from the central asian bases we are developing to encircle China. They weaken India vis a vis Pakistan. They further separate us from our tenuous Continental allies in Europe.
This is to say nothing of the psychological damage his possession of nukes would do to the US. We would be a bit less--assertive, shall we say--if we knew that a sworn enemy had the "ultimate weapon." Financial markets would not take well to this, I assure you. Think "Dow 5000" or worse. Nasdaq would look like the Vancouver Stock Exchange...if we're lucky.
Do not misunderstand me: anthrax is very, very, very bad. I know that now (thanks to you). Nukes, however, would fundamentally and irrevocably alter the entire global balance of power.
I'm skeptical that Saddam is close to having nukes, or that they would last very long if he did get them. I think the nuke talk is just because we can't talk about anthrax without people putting two and two together.