That's what he has effectively been doing... the only new wrinkle is the resignation, but that's just paper. From the noises coming from Rumsfeld, in order for the US to even consider him 'resigned,' he actually has to physically leave Iraq.
A resignation might not be just paper. What if he actually ceded the territory, and went underground? He would give up the advantage of having all the Iraqi infrastructure; on the other hand, that traditional infrastructure can't stand up to the U.S. anyway. In a sense, that infrastructure is his major weakness, since it is a target for our retaliation.
If he can maintain control of his WMD even after giving up the territory he now controls, he would maintain his major military advantage and at the same time get rid of his major vulnerability.
I do not know if he has the experience or skills to go underground successfully though. He hasn't lived the life of someone like bin Laden.
In any case, what would we do? Attacking Iraq would seem pointless if he did this. He would have converted from a nation-state with a terrorist component to a purely covert terrorist organization, the kind that's very hard to deal with.