Thrawn,
It is my understanding that The "Palaces" in question are part of Iraq's attempts to run an end around the sancitons. Many if not most of them are new construction since 1991. They are created for the sole purpose of creating safe havens for these programs. I do not recall their exclusion as part of the original deal, but rather as something that was tacked on by the Iraqis in subsiquent inspections. Attempts to inspect these areas are documented in the UN reports of UNSCOM (I can't find the FAS link, I'll look again later).
This is just part of Saddams attempt to get around the inspections, much like his starving his own people to get out of the sanctions against his government.
-Sikboy