This important item in Ha-aretz states that Saddam has transferred over $15 million to Palestinian families over the last two years, and trained many Palestinian terrorists:

Rakad Salim, the Secretary-General of the pro-Iraqi "Arab Liberation Front" organization in West Bank, who was arrested by Israel last week, told his interrogators that he had close connections with the Iraqi Ba'ath party.
According to the Shin Bet report, Salim said he met with Saddam Hussein two years ago, and that Saddam himself had decided to transfer funds to Palestinian families, as well as setting the various amounts of money.
The funds were then transferred through a branch of an Iraqi bank in Amman to a Jordanian bank in the city, and from there passed to a branch of the Jordanian bank in Ramallah, where the group had an account.
...The Shin Bet report states that Salim held regular meetings with representatives of Hamas and the Popular Front for the Liberation of Palestine (PFLP) in order to plan terror attacks. Furthermore, the Shin Bet said, Salim had served as political advisor to Yasser Arafat. He added that the PA was also involved in the transfer of funds.
The Shin Bet said that Palestinian ministers, mayors and members of the Palestinian Legislative Council took part in ceremonies to hand over the Iraqi money to the families of victims, including the relatives of suicide bombers.
...Over the past two years, the Shin Bet has arrested 16 Palestinians who underwent training in Iraqi military camps. Most of those were under the direction of Abu Abbas' Baghdad-based Palestinian Liberation Front. Sources in the security establishment said that Iraq has clear intentions of increasing its involvement in terror attacks in the territories.

This is one reason why people aren't crazy to suggest that an invasion of Iraq will help salve the Israeli-Palestinian war, rather than inflame it further.