You are correct in regard to the bluffing act that SH was performing to the West, to the UN, to his own Iraqi population and to the larger Arab world. For the sake of his own ambition to be the Saladin of the Arab World, his own interests in preserving a sense of honor in the Arab World, his plan to maintain a deterrent force, etc, SH did preserve the fiction that he did have WMD potential. One of the failures of the intelligence not just in CIA but also in American media is in imagination (and the NYT editorial admits as much): we could not conceive why SH would want to trick the world about his WMD capabilities. Well, duh, such a desire to trick an audience is what makes a good salesperson in the bazaar and a powerful dictator of a captive population.
I suggest you read the Kay Report, Saddam Hussein definitely had the capability to produce Chem/Bio weapons, and I'm sure he wasn't trying to purchase Uranium Oxide "Yellow Cake" for a new baby food plant. The only claim that was made by the Intel community that wasn't correct was the claim that there were stockpiles of WMD's ready for deployment. I believe the stockpiles were removed before the war and will be found soon. Libya is already hinting to know their whereabouts