Hussein, in my opinion, was a deterrent to Iran but that was before the Gulf Wars. After these two wars he was pretty much useless as a deterrent since we imposed a no-fly zone and destroyed most of his weapons. After the Persian Gulf War Iraq had sanctions placed on them that severely curtailed their military and the UN destroyed most, if not all, of the chemical weapons and missiles. We've already had discussions regarding WMDs and the possibility there may still be some and hopefully we'll never find out, or if we do, they won't be used against us or anybody else.
Hussein had his shot to take down Iran during the Iran-Iraq war when he invaded Iran but ultimately failed and the UN was successful in forging a ceasefire. Hussein was worried the Shia majority in Iraq would rise up and challenge his Ba'athist party rule due to the rise of the Iranian Islamic Revolution and Ayatollah Khomeini.
I'll throw out another thought. The real deterrent, in my opinion, to Iran is, and always has been, Israel. They are the only country in the middle east with the weapons to successfully attack Iran and they don't have to worry about any Muslim backlash if they do attack since the Muslims already hate them.
What G.W. Bush didn't consider was what would happen to Iraq if Hussein was disposed? Sure, the guy was a tyrant and a dictator and a totally despicable human being but he was the glue that held the country together, if only by fear. After he was deposed the Sunnis and Shias had free rein to kill each other and the rest is history. There's still unrest in the country and probably always will be. Even with a U.S. troop presence in Iraq they (Sunnis and Shias) would still find a way to wreak havoc on each other in the name of Allah.
The same thing happened in Yugoslovia when their dictator Marshal Tito died. He was another strongman who ruled with an iron first. Remember how the Croats, Serbs and Bosnians were held in check until he died and what happened after? The hatred that had festered for centuries was released again and killing each other became the national pastime.
In both Iraq and the former Yugoslovia we're talking about centuries of hatred between groups of people and it's really sad that people can't put aside their differences and work together to make the world a better place.