Let's face it. The U.S. isn't going to launch a pre-emptive strike to prevent Iran's acquisition/development of nuclear Weapons. Neither is Israel. And neither are the two, together. Iran is going to have nuclear weapons within the next few years. Even a threatened oil price war from the Saudis will not deter them.
Let's accept that as a given.
What will Iran's leaders do once they have nuclear weapons and missiles with sufficient range to reach Tel-Aviv and Riyadh (besides swagger and threaten)? Here is one piece that raises the spectre of a second holocaust [h/t to Eric]. Whether that actually happens will depend on two things:
1. The attitude of Iran's leaders toward self-destruction. If they really believe that there is a higher purpose for their actions, then they will launch the missiles with nuclear warheads at numerous Israeli (and perhaps other Middle Eastern non-Shiite) targets. So what if they and their people "suffer" massive retaliation? They will have carried out their tasks in pursuit of these higher goals.
2. If their leaders do not have that attitude toward self-destruction/self-sacrifice then it must be made abundantly clear to them that they will be annihilated if they launch such an attack, no matter what they threaten. In this instance, we must remain resolute that no appeasement out of fear is possible.
After discussing this with my friend, Eric, it has become clear to me (for now — I'm always willing to update my priors) that either way, Israel should be working furiously to develop the best possible anti-missile system, and the U.S. should be helping them do so.