Control of the oil in Iraq is more strategically important than in the one scenario you describe.
As an aside I never read that Hussein had threatened to flood the market, I read that he threatened, as a negotiating tactic, to withhold oil. Do you have a source for the "flooding the market" claim?
For values of "for other things" of creating a massive flood of dollars on the world financial markets, undercutting its value, and precipitating a financial crisis the likes of which the US still hasn't seen.
As an aside I never read that Hussein had threatened to flood the market, I read that he threatened, as a negotiating tactic, to withhold oil. Do you have a source for the "flooding the market" claim?