Well, you can not assume rational thought for Saddam. It appears to me, that he(we, the world), did indeed destroy most, if not all of his weapons. (Note that without his co-operation there is only one way to ascertain this fact, and that is what the U.S. has done).
In light of his stance towards the inspections, this can mean only one of 2 things. He either bluffed about maintaining his weapons to maintain his stature in the Arab world, or he did it to maintain the threat towards his neighbors. Either way, as the result shows, it was an irrational and highly stupid act.
As for a direct link to a specific terrorist act, I do not think that it is possible to indisputably prove such a link, and do not think it is required. At least by American Law, the evidence is solid enough to convict him personally, and his regime in general, for supporting terrorism.
Also, again, do not forget the attempted attack on the elder Bush. The evidence was strong enough for the previous administration to take retaliatory steps against him, so it can not be ignored.