The Allies didn't have Nerve Gas but the Germans believed the U.S. did. The German chemical companies felt that the large and advanced chemical and insecticide industry in the U.S. must have developed it if they had. So at least part of their reluctance was based on a fear that it would also be used against them.
I really think that the experience of most of the senior military had with gas in WWI affected their willingness to use it in WWII. They new that after the initial use it really had little affect on prepared troops (Nerve gas was a little different) and no one really wanted to deal with the suffering it caused (Hitler's experience was not unique)
When I was growing up in the late 50s our next door neighbors were an older couple. He had served in the 29th division in WWI and she had been a nurse 'over there' She had been gassed and spent most of her life in bed wheezing for breath. I remember going over to visit (They had set up her bed in the dining room on the first floor of the rowhouse). It became a tradition that at Halloween we would stop in and see her in our costumes, many of the neighborhood kids did. We would knock on the door Mr Bill would open it and we would shout 'Trick or Treat' We would be asked to come in and show off our costumes. We would also do it at Easter and the first day of school (new clothes time) As we got older the tradition continued, not as cute kids but because we knew it was the only way she saw most of the world. When I started being interested in military history and reading about WWI and asking questions my mother told me why Mrs Hanna was that way. She had been that way since Mom was a little girl before WWII. When I was receiving Chem Warfare training in the Air Force in the late 70s (When we figured the next war WOULD involve chemicals) I started thinking of Mrs Hanna again. Now if a single case that I only knew of second hand had affected me that much how much were the senior officers and political leaders (many of whom had been junior officers on the Western Front in WWI) affected who had seen friends and comrades injured? I can believe that Hitler as well as other senior leaders decided that chemical warfare was just to ghastly to consider using.