I mean, where was their attack on radio station Gliewitz? Or, indeed, where are the WMD? If someone is willing to organise a terror attack on their own country or allied countries for political reasons (and I wonder what that would have been in the case of Madrid...), why not fake Iraqi WMD?
If one looks at what they did, it is bloody obvious: their weapon of choice to influence the public is spin, spin, massive spin. (Which kind of underlines their disconnect from reality.)
The US and British leaders are so much into spin that even the big fakes they used - the bioweapons trailer story, the Niger yellowcake story, the 45 minutes story and such - they only got passed on by someone else (Chalabi's men, or the Italian secret service), rather than fabricate stuff themselves. And during the war, the most the psy-ops troops could do in terms of active propaganda was an improvised Saddam statue pulling and the Jessica Lynch 'rescue' - which were neither terribly complicated undertakings, nor particularly professional (both were exposed real fast).
And, if one looks at some US polls on Gitmo, prospects for Iraq, or Iraqi WMD, one has to admit that this PR weapon works well enough for them. *Lunatic*, n. One whose delusions are out of fashion.