When Iraqi military forces launched a successful nighttime offensive to regain territory held by Iran in June 1988, they began by firing artillery shells containing mustard gas and followed quickly with poison gas bombs dropped from airplanes and helicopters before beginning a massive tank assault.

The battle of the Majnoun Islands, north of Basra, was one of only a few in the eight-year conflict in which Iraq used chemicals in a planned attack, rather than to fend off tactical defeat. As a result, its legacy figures prominently in contemporary, nightmare scenarios of U.S. military planners endeavoring to protect soldiers dispatched to Saudi Arabia.

Unique among Third World nations, Iraq has attained extensive battlefield experience with highly toxic mustard gas and the deadly nerve agents tabun and sarin. It also has what is perhaps the world's largest operating network of virtually self-sufficient poison gas factories, research laboratories and protected storage facilities.

With engineering and technical assistance from the West German firm Karl Kolb GmbH and other European experts, Iraq began to produce poison gas weapons in the early 1980s and first used them in the Iranian conflict in 1983. By the end of the conflict, as many as 50,000 Iranians, including civilians and children, may have been wounded or killed by it.

Before 1988, however, Iraq typically waited until it was facing strongly unfavorable odds in defending an important battlefield position to employ weaponry condemned by the world as uniquely terrifying and barbaric, according to Western analysts. This hesitation appeared to dissipate as the war drew to a close, raising the fresh possibility that Iraq might be willing to use poison gas in the early stages of any future combat.

Retired general George Crist, a commander of U.S. forces in the Persian Gulf from 1985 to 1989, said this week of Iraqi President Saddam Hussein that "in every major offensive of the last year of the war, he preceded his attacks with chemical weapons. He's skillful at using them. They do it very much by the book. We certainly can expect chemical warfare from him."

U.S. experts said there is no conclusive explanation for Iraq's apparent change of tactics. But their speculation is that Baghdad decided after at least five years experience that poison gas could be used effectively to demoralize a poorly equipped enemy, or simply that they had little to fear in the way of sanctions or penalties from the rest of the world.

"Chemical weapons are now integral to the way that Iraqi forces operate," said a military expert who has received briefings on the Iraqi program. "As {Baghdad} . . . saw there was no reaction, that the world didn't care much about dead Iranians, it used the poison gases more and more."

Only after Iraq used the gases in August 1988 to slay hundreds of Kurds, a rebellious minority within its territory, did worldwide revulsion become pronounced. Still, the Reagan administration largely opposed congressional efforts to enact mandatory trade sanctions against Iraq and any other nation that used chemical weapons.

"We practice, in my judgment -- not we only but {also} the rest of the world . . . a policy of trying to appease Saddam Hussein as if we could buy his benign behavior," said Sen. William S. Cohen (R-Maine) yesterday. "I think that we were not strong enough in really coming down hard on him {for using poison gas}, and as a result I think we've lowered the threshold for the use of chemical weapons in the future, and that's a prospect we face right now."

Much of the information about Iraq's chemical arsenal is derived from United Nations investigations begun at Iran's request in March 1984, which examined fragments of bomb, artillery and rocket casings collected from battlefields and interviewed Iranian victims. The agency's reports played a key role in refuting denials of Baghdad's senior officials, before 1988, that poison gases had been used in the war.

Details of the Majnoun battle and its gruesome results were reported in an August 1988 U.N. report, which cites as an example an Iranian soldier, Hossein Zamiri, who donned his gas mask three minutes after an Iraqi artillery shell explosion and suffered a "darkened face, skin peeling on the right temple; torso has dark pigmentation, becoming black on the abdomen; left shoulder has a lesion resembling a second-degree burn . . . armpits are jet black."

U.N. inspectors were told that Iraqi nerve gas was used against front-line troops and mustard gas was used to attack logistic units, command posts and reserves in rear echelons, evidently to disrupt potential counterattacks. Some U.S. specialists, including Thomas McNaugher, a former Army officer now at the Brookings Institution, argue that the gases added only marginally to the success of attacks on Majnoun and other targets, a circumstance that makes their use in those conflicts seem even more ominous.

By the end of the war, according to several U.S. experts, Iraq's leaders had evidently granted lower-echelon military leaders authority to use chemical weapons whenever they wanted. "This pulled the decision-making down from the political and strategic level to the tactical level," one expert said. "We certainly hope that policy is no longer in effect."