Everyone thinks Iran will nuke Israel if they get nuclear capability.
But consider this. Iran would much rather take credit for giving Israel back to the palestinians. I am sure they would want all those nice cities and resorts to be intact. Isreal is just too valuable a parcel of real estate to destroy.
Sunni kill more shia every year then both sides have ever killed Isrealis and shia know this full well. Muslims are forbidden to make war upon each other but both shia and sunni conveniantly think of the other as not really muslim. So there is no religious dogma preventing them from doing so.
Iran always wants to increase it's power in the reagion. What better way to do so then to knock out other influential countries. Countries with lands of no particualr interest to Tehran populated with sunni who kill shia all the time. They will threaten to use it against everyone but would only use it against Sunni dominated countries like Saudi Arabia or Egypt.
They know if they use it against a western country that would be the end of them. But they know if they use it against a muslim country they won't even get a slap on the wrist from the other states in the OIC.
Worst case scenario is that they could use it on a sunni muslim country but try to put the blame on Israel to create a pretext and galvanize the muslim world into attacking Israel in a conventional war. This is a very good reason to prevent them ever having any sort of nuclear capability.
So I doubt they would ever nuke Israel or a western country but be far more likely to Nuke a sunni country. The real power of a nuclear weapon is that everyone knows you have it and not in it's actual use. They will be more protected from invasion and will be more able to exert their will in the international community. That is to say they will use it to protect themselves and extort whatever they want from other countries.
Even though they won't nuke Isreal they must be prevented from gaining nuclear capability.