I am inclined toward your theory of elite disconnection from reality more than toward simplistic explanations of the "control oil" variety. Your critique of the oil control explanation is right on target.
But having said that - we still need to provide some plausible explanation why this delusional policy was actually pursued.
One way to approach this is to contrast the Iraq fiasco with the Cuban Missile Crisis - where you had a gung ho military ready to act against a credible threat (the results of which would be disastrous, we later learned, but that is a different story) - yet the order to invade did not come and the political approach prevailed.
One possible explanation of that difference is the quality of leadership - JFK was a strong leader not afraid to counter his staff and fully cognizant of the potential consequences of the decision to invade. So he was unwilling to take that risk, and was also in the position to reign his gung ho lieutenants in.
Bush, by contrast, is a weak leader (I understand that TS has a very weak executive) mainly a figure head, like Brezhnev or Ronnie the Great Communicator Reagan - whose main role is to personify popular images for the masses while the gray eminences (the Cheney and Rumsfeld gang) make the decisions. In this case, he simply rubber-stamped what his nominal underlings but de facto decision makers put before him, without fully realizing what he was getting into.
Stated differently, the explanation of the Iraq debacle lies not in the purported imperial gains to be achieved by the US as a whole, but in the nature of the US governing bureaucracy. The Cheney and Rumsfeld gang pushed for the invasion to advance their narrow partisan interests - their position within the governing bureaucracy would be strengthened if their gamble succeeded, but they did not risk much if it backfired. Their "boss" Bush would pay the main price. Besides, they probably perceived the risk of failure as low.
That is to say, they did it merely because they could, and thought that they could gain something from it. It is like a bunch of kids who set their school building ablaze to get a day off from school. Under most circumstances, strong leader would prevent such behavior among his lieutenants, but in this case it was the lieutenants rather than Bush who were actually in charge.
If this explanation is correct - the likely outcome is that Bush will be sacrificed in November either by his own lieutenants or by the ruling class, or both.
Wojtek