It would be 20 years before the bomber - and one-time apprentice to Abu Ibrahim, currently featured on the FBI list of most wanted terrorists - would admit guilt in an American courtroom.
Now, credited for his cooperation against associates, Rashed will be released from federal prison within days after more than two decades in custody in Greece and the United States.
The release does more than spring loose a convicted terrorist. It also could deprive the government of a star witness in the event that Ibrahim, a Palestinian master bomb-maker who authorities say orchestrated the Pan Am attack and similar strikes around the world, is ever captured. A former top lieutenant, Rashed would be able to implicate Ibrahim as the architect of the attack and help establish his identity in case prosecutors ever had a chance to bring him to the U.S. to face justice. Once freed, it's not clear that he would continue cooperating, though the Justice Department says it has enough other evidence for a conviction.
"They certainly could teach people coming along. Whether they would or not, of course, I don't know. Their ability to make bombs go off is quite extraordinary," said Bob Baer, a former top CIA officer who worked clandestinely in the Middle East.
Justice Department spokesman Dean Boyd said the charges against Ibrahim, who was indicted in 1987 along with Rashed and Rashed's Austrian-born wife, remain active and that the government still seeks his prosecution. He wouldn't comment on the potential impact of Rashed's release, but noted that prosecutors indicted Ibrahim long before Rashed was in custody or had begun cooperating.
"The Justice Department does not bring charges against a defendant unless it believes it has sufficient evidence to prove the defendant's guilt beyond a reasonable doubt in a court of law," he said in a statement.
Rashed's 2002 guilty plea required him to cough up information on other terror plots in exchange for a release date of March 20, 2013. The agreement also stipulated that Rashed, a Jordanian-born Palestinian from Bethlehem, would be deported to a country of his choice upon his release. His lawyer wouldn't comment on Rashed's plans. The U.S. Bureau of Prisons, which lists Rashed as 63 years old, also declined to comment.
The plea deal reflects the balancing of two government interests that are sometimes in conflict: securing lengthy prison sentences for dangerous felons while also incentivizing their cooperation against higher-value targets through the prospect of an early release. Though Ibrahim remains at large, Rashed's cooperation has already been extensive by some accounts, including providing information about a 1986 airplane explosion that killed four Americans and a 1982 Berlin restaurant bombing that killed a child, former Assistant U.S. Attorney General David Kris wrote in a 2011 article for the Journal of National Security Law & Policy.
U.S. authorities have long seen Rashed as a critical link to Ibrahim, who in 1979 formed his own terrorist faction - "15 May" - named after the date of Israel's founding. Ibrahim lived in Iraq for a time under the protection of Saddam Hussein, and former intelligence officials have said he was closely aligned with the Iraqi intelligence service, and documents show 15 May received monthly "support funds."
A devout Sunni with an engineering background, Ibrahim - whose real name is Husayn Muhammad Al-Umari - was known for crafting sophisticated plastic explosives that could be smuggled in bags and suitcases and that relied on a unique delayed-timing device.
The indictment links the group to five bombing missions, including a bomb that malfunctioned aboard a Pan Am flight in Rio De Janeiro, but the FBI believes the organization was responsible for many more attacks in cities around the world. Australian media reports last year said Rashed had been interviewed in prison about the 1982 bombing of the Israeli consulate in Sydney.
"Simply stated, they were involved in a worldwide bombing escapade, if you will," said retired FBI explosives expert Denny Kline, who investigated the Pan Am bombing. He says the FBI was able to connect at least 21 devices to Ibrahim.
A 2009 Associated Press investigation revealed Ibrahim was still alive, and law enforcement officials say he's believed to be in Lebanon. Now in his mid-70s, he's faded from the spotlight as authorities have poured resources into dismantling al-Qaeda. But he's enough of a concern that the State Department has offered a reward of up to $5 million for information leading to his capture. He's also on the FBI's most wanted terrorists list.
After the investigation was published, Rashed wrote AP from prison - even though his plea agreement prohibited media interviews - saying he and Ibrahim met in Iraq in the 1970s and bonded "over the Palestinian cause and other politics topics." Rashed emerged as a top lieutenant and bomb courier as Ibrahim prepared explosives intended for American and Israeli targets. Prosecutors have called him a "cold-blooded killer" with a criminal history that includes drug smuggling, escaping from a Turkish prison and traveling the world under fake passports and bogus identities.
The August 11, 1982, bombing of Pan Am 830 was set in motion when Rashed, wife Christine Pinter and their son traveled to Tokyo with fraudulent identification documents. Rashed tucked the bomb beneath window seat 47K, pulled the pin, engaged the timer and got off in Japan. Toru Ozawa, a 16-year-old vacationing with his family, occupied the same seat on the next leg.
The bomb exploded as the plane crossed the Pacific Ocean, filling the rear passenger cabin with smoke, screams and blood.
Passenger Tom Stanton, seated several rows away while returning home from a business trip, said it sounded like a shotgun blast and smelled of gun powder. Amid the pandemonium, the flight crew ushered rear passengers to the front, but Stanton tried to stay behind to help others who appeared in shock. He thought fireworks had perhaps gone off, but didn't suspect a bomb.
"Going through my mind - terrorism, whatever - you never thought of that," he said.
Ozawa was killed as he cried out for his parents. More than a dozen others were injured. The pilot managed to land the plane despite a gaping hole in the cabin floor and bulge in its exterior.
"The sad thing about this is Toru Ozawa is dead. He'd be a man with a family, and it was heartbreaking," said Dan Bent, then Hawaii's U.S. Attorney. "He was killed right in the presence of his family. He was eviscerated by this bomb."
A piece of gold-plated nickel located inside Ozawa's body helped link that explosion to others by Ibrahim. Another big break came after a 15 May defector FBI betrayed Rashed to the FBI.
Rashed flew back to Baghdad after the bombing, and though at large for years, was arrested in Athens in 1988 with a phony Syrian passport. The Greek government refused to extradite Rashed and insisted on prosecuting him, a decision that rankled U.S. officials who feared he'd escape justice under that country's legal system.
"It was disappointing and it put some serious strain on the bilateral relations with the Greeks, as we told them it would," said L. Paul Bremer, then the ambassador-at-large for counterterrorism. "Basically, it was a political decision. They gave it no real legal cover as I recall. They simply said we're not going to turn him over to you, but we'll figure out how to try him."
In Greek court, Rashed delivered long, rambling monologues that veered between didactic and combative.
He denied being a terrorist and called the charge a "frame-up," insisting his real name was Mohammed Hamdan - the name on his passport - and that he was a PLO fighter in Beirut at the time of the Pan Am explosion. But he also said the Palestinians, as victims of the "Zionist establishment," were justified in using "violence against their conquerors in any way they deem appropriate."
"I want to say to those who consider a forged passport illegal, the Palestinian revolution started because there was no identity and we are fighting for this passport so that the Palestinians don't remain just numbers in the files of the United States," Rashed said.
Greek police testified that he was identified as Rashed , who years earlier had been arrested and imprisoned for smuggling hashish into the country, through his fingerprints. A three-judge panel convicted Rashed of the bombing and sentenced him 18 years in prison - a punishment later reduced to 15 years.
He was released for good behavior in 1996, after just eight years. The FBI whisked him out of Egypt in 1998 and returned him to the U.S. for prosecution.
After years of legal wrangling, he struck a deal that allowed for his release in 2013, after less than 25 years in custody.
Wherever Rashed goes, he may not be done talking. He told AP in the letter that he planned to "write all in two or three books."
Roy Hawk, the Pan Am 830 pilot, said he's never forgotten the carnage inside the plane. He was dismayed to learn of Rashed's pending release.
"To tell you the truth, I never figured he'd be released," Hawk said. "I just figured he'd be in prison the rest of his life, and that was it."
Associated Press writers Matt Apuzzo and Adam Goldman contributed to this report.