Update: The Pentagon on Friday dialed back its assertions about the reports of chemical weapons use, telling reporters that the Defense Department is still investigating the matter and could not confirm ISIS's capabilities.
In August 2014, President Obama authorized airstrikes against the Islamic State of Iraq and Syria (ISIS) as part of a targeted effort to stop them from wiping out a religious minority trapped on a mountain.
A year later, the U.S. battle against the Islamic militants has been transformed as they have taken over vast swaths of territory in Iraq and Syria. There are 3,550 U.S. military personnel in Iraq to help train Iraqi troops, and the U.S. began launching airstrikes against targets inside Syria from a Turkish air base.
But ISIS has proved to be a formidable and evolving enemy. On Thursday, a senior defense department official said reports that the group had used mustard gas in an attack against Kurdish troops were credible.
"It's not a game changer with respect to the threat in general," CBS News Senior National Security Analyst Juan Zarate said of the development. "We've known that ISIS has not only maintained territory and momentum but has been advancing in terms of its weaponry, and there have been concerns that ISIS has gotten its hands on chemical weapons, so that concern is not new."
But chemical weapons in the hands of the preeminent terrorist group? "That begins the nightmare scenario we've always talked about, which is [weapons of mass destruction] in the hands of terrorists," he said.
The defense official said mustard gas is "antiquated" as a weapon and must be used in large concentrations to be lethal, so the Pentagon does not view this as a game changer.
It's not clear whether the mustard gas was left over from stockpiles held by former Iraqi dictator Saddam Hussein or brought over from Syria, though the official said Syria is more likely.
Tom Sanderson, who directs the Center for Strategic and International Studies' Transnational Threats Project, told CBS News that the source of chemical weapons is a key detail.
"Did they come across a spare shell, or do these guys have 40 racks of artillery and mortar rounds that are mustard gas from Saddam's arsenal?" he said. "The key issue here is determining quantity. If they have quantity, then it's a game changer... They can threaten repeated use of it and possibly take it abroad."
Syria agreed to give up its chemical weapons stockpile in 2013 when the U.S. said it might use missile strikes against the country in response to a chemical attack outside of Damascus. Although the whole stockpile should have been destroyed, questions remain about whether Syria hid weapons from international inspectors.
Iraq agreed to destroy its chemical weapons stockpile - largely a remnant of the 1980s and early 1990s - when it joined the Chemical Weapons Convention in 2009. But its government told the United Nations last summer that it had lost control of a former chemical weapons facility near Baghdad to "armed terrorist groups" and would be unable to destroy the contents of two bunkers. At the time, a Defense Department spokesman said the material was probably too old to be used if it was even still accessible.
Sanderson said if ISIS has chemical weapons, it's "not a game changer until it's clear they can use [them] frequently, and then it becomes a game changer because it's a terrifying weapon and it's hard enough to get Iraqi forces to fight and to fight well against ISIS."
"If they feel that they are going up against mustard gas, just as the Kurds did against Saddam's forces back in the '80s, then you're going to have even fewer willing Iraqi security forces," he said. He added that it could be dangerous if chemical weapons fell into the hands of Shiite militias in Iraq, who might use them against Sunnis and spark even more sectarian violence in the country.
Chemical weapons are not the sole threat from the group these days. They have carried out a series of car bomb attacks in recent months in places like Sadr City, Diyala and Baghdad, killing hundreds.
"The fear that they're going to invade and take over Baghdad, like an invading army of Mongols - that's not going to happen," Zarate said. "The way that they're going to impact Baghdad is exactly this: Precision terrorist attacks, foment sectarian tension, hurt the morale of the Iraq forces."
"This is a group that is adapting, it's more dangerous, and really does force the U.S. government to think differently about this problem," he said.
Whether that actually happens remains to be seen. In June, President Obama said the U.S. did not have a "complete strategy" to fight the group because there were outstanding questions about training Iraqi troops to carry out the fight on the ground. In July, he said there were no plans to send more American troops overseas.
Sanderson said there is no political pressure on the president to do anything different, so he doesn't anticipate a change in U.S. strategy anytime soon.
"Airstrikes are definitely killing thousands of fighters over time but the fact that the U.S. is involved and this is a coalition also draws fighters to the field. No one knows what that ratio is - number killed versus number recruited by the airstrikes," he said. Plus, he added, the U.S. doesn't have effective ways to determine who is being killed by airstrikes without boots on the ground.
"To destroy this group you actually have to take territory away from it, you have to destroy the very essence and romance of the movement. We're not doing that," Zarate said. "I think we are in containment mode and so this chemical attack I think is going to raise the question -- can we afford to sit back and wait?"