The money is a direct reward for terrorism. Distinctions between whether he supports or trains them are irrelevant, as irrelevant as what the Palestinians would or would not do. My point is that Saddam still encourages and gives aid to them.
Your response? "Represhensible, but he still doesn't use terrorists."
Saddam supports terrorism. This is just one instance that we know of. It's naive to assume there are not others.