Having been trained as a Chemical Officer in the US Army, I must tell you all that your ideas about how effective chemical and biological weapons are is greatly exaggerated. Mustard gas, nerve gas, or any other chemical agent is easily covered in the ability of artillery and planes to bombard. Civ III does not specify the ordinance used in the bombing (incendiary, contact bombs, torpedoes, gas, anthrax), and should not.
As for WMD's, consider how much gas was used in WWI. The quantity is actually mind-boggling. Yet when my troops talked of chemical weapons their typical response was, "What difference does it make? If chemical weapons are used everybody is going to die anyways, right?" I would then try to give them a history lesson about WWI. Biological agents are only about as effective as chemical ones. It may be possible to infect the entire world with a biological agent, but I don't think Civ IV should be busy investigating that possibility.