You're right that Sadam supports Palestinian Terrorist. They fight Israel, and he considers Israel a big enemy. But Al Quaida is another matter. They don't like him much, because they are Islamic fundametalists and he is an Socialist dictator. These two don't mix very well.

It's also interesing to look at a few past interventions of the US in the region and how bad they turned out.

When the US didn't like the Soviet presence in Afghanistan the supported the Makhtab al-Khidamat to fight against them (One founding Member was Bin Laden) clicky

When the US didn't like the fact that the Shah in Iran was overthrown by Khomeni they supported Sadam in the War against him

One of the biggest reasons Bin Laden and his people are pi**ed of is because the US used their "holy country" as a staging area in Desert Shield / Desert Storm, which freed Kuwait but failed to resolve the situation.

The US intervention were always some plans to "get rid of that one Regime and it's ok". And I don't believe that will work in an region messed up like the middle east. Take out one guy and the resulting power struggle creates dozends of more problems.

When you thing about it, every military involvment of an western nation in that area turned out to be a big mess in the end. Al the way back to the crusades. Granted, Afghanistan looks quite ok till now. But it's not over there yet.

Also a good article on the US - Middle-East relations. clicky