If you overlook the James Bond stuff in this, it is still plausible that some disaffected ex-Army types are drifting over to an enemy organization. After all, a lot of the opposition during the war simply melted into the civilian population instead of fighting.

The rest is probably horse exhaust. I find it hard to believe a large force of soldiers could be paid by Saddam without that being tracable somehow. What is he paying in? Gold? Quatloos? Notes with his picture on it? Dollars? Currency in Iraq is being tightly tracked in most areas. Where will the soldiers spend it?

I do not find it implausible that there are large underground facilities, but believe it's more likely that if Saddam is still playing Leader that he is being shuttled around quietly between small, non-descript facilities.