I am not comforted by the notion that Israel can deter Iran if we just do nothing about Iran's looming nuclear weapons. Discussions that Israel could lob an awful lot of nukes at Iran and therefore take care of the problem if deterrence fails ignore the fact that there is no way that Israel would restrict its retaliation to Iran if it loses Tel Aviv.
Consider the Israeli strategic situation. Their enemy isn't a particular state but the Arab world collectively plus Iran. If Iran hits Israel with a nuke and that nuke does significant damage to Israel, Israel is wounded and perhaps an inviting target for hostile states like Syria and even barely friendly states like Egypt which has a population that hates the Jewish state notwithstanding little things like peace treaties. Add the Palestinian-majority Jordan and the always hostile Saudis and you might have the makings of a 1948 Round 2 as hostile Arab states try to throttle Israel where they failed sixty years ago.
Heck, Iran under that whackjob Ahmadinejad might consider it a real honor to take a spear for the team if it gets rid of Israel.
So if Israel is hurt badly enough (and I don't know if a lesser or greater loss than Tel Aviv would reach this level--but there is some level of damage that would make Israel vulnerable to a conventional/chemical invasion), there is no way that Israel will restrict their nuclear retaliation to Tehran and a few other Iranian cities.
If Israel has 40-60 nukes (and I just don't believe the numbers cited some places that reach 500), Israel might use half--say 25--to strike out and cripple their enemies while leaving a reserve to threaten even more damage if attacked again by chemicals. Israel would nail Iran with perhaps a dozen to hit Tehran, some major cities of religious or economic importance, and Iran's nuclear reactors and major oil-exporting ports.
Then hit Damascus and Syria's major port. And hit Cairo and Alexandria and perhaps Port Said. And hit Amman. Take out Mecca, Medina, and Riyadh. And possibly Beirut just in case. Tripoli would probably also be targetted.
I just don't think a nuclear strike that worked would remain bilateral. There is no way Israel would take the risk of a follow-up conventional invasion by hostile states emboldened by a mushroom cloud over Israel. The only way a nuclear war might remain bilateral is if Israel shoots down the Iranian missile. Israel would strike back--perhaps at an isolated economic target like Kharg Island just to hurt Iran yet avoid mass murder. But Tehran might be targetted anyway--I just don't know what the psychology of the situation would generate.
And what the hell would our planet look like in the aftermath of this mass death and destruction?
Just one more reason that we can't afford to let the nutball Iranian regime get nukes. We have to act. Just wishing for the best when Iran is run by nutjobs is criminally negligent.