So what has Iraq actually done that poses a threat to the USA?

Sure, he's a threat to his own people in all kinds of ways, as he was at the time that the US was backing and arming him, but that is another matter. Round the world there are all kinds of countries with governments that are a threat to their own people, and most of them have reasonably cordial relations with the USA.

There's a saying that to a certain kind of person, once they have a hammer, everything they see starts to look like a nail. But in fact most thing don't get fixed by hitting them with a hammer.