By that logic, that means we should go around and liberate all oppressed nations.
No, by your logic we shouldn't liberate anyone unless we can liberate EVERYONE. A better analogy is watching 300 people drowning and walking away because you don't want to pick favorites by saving only 2 or 3.
Read up on the history of Saddam's reign and who his puppet master was. Yes, that was Rumsfeld shaking Saddam's hand.
A better tip is to research the subject for more than 5 minutes on Google. Saddam was nobody's puppet. Yes, America, Rumsfeld and especially the CIA worked with him and even tried hard to influence him. So did the Russians. So did the Saudi Arabians. So did pretty much every major power in the world. Leaders of oil producing countries get a lot of international attention. Saddam was, importantly, not walking to the tune of America's harp. He wanted war with Iran for his own reasons, and America jumped on board because it worked for them too.
Then we gave him weapons, including chemical weapons to fight Iran.
That is in fact false. America did not sell Saddam chemical weapons. They did sell him some dual use equipment, most notably helicopters that he likely used to deliver the weapons. However, Saddam's suppliers of chemical weapons were primarily in Germany and Singapore. His largest financial backers, were Saudi Arabia. America did provide invaluable intelligence to Saddam though, specifically to most efficiently deploy his chemical weapons to maximum effect. So America's hands are plenty dirty, despite not actually selling the weapons themselves.
A lingering question is why should that detract from the positive nature of changing course and finally opposing instead of supporting such a monster. Seems to me that's the right direction to be headed.
regarding Saddam's atrocities it is said:
You act as if that blood isn't on our hands as well.
No, you are acting as though Saddam's atrocities aren't on America's hands. If that blood is on America's hands, how can you argue against them being expected to step up and put an end to them?