Nothing ever seems to change in the middle east. News of 20 years ago can be confused with yesterday's news.
"I suspect that it is chiefly Israel that feels most threatened" - If that is indeed the case it would mean that the Israeli's are in fact wiser than other countries which I sincerely doubt they are. (Though they might be bolder.) It's true that Israel has the most to lose because a few atomic bombs can actually destroy it. But atom bombs on Paris, London, New York, Chicago, LA, Washington may not destroy France, England or the US, but it is an outcome that should be feared just as much.
You originally asked:
"I wonder whether maybe it is ok for Iran to have the bomb. Not good but
maybe better than boxing them in with sanctions they can't stand."
If Iran will have atomic bombs their aim won't be Israel. Hating on Israel is merely a convenient ploy for Iran, and other Arab leaders, to convince people to support them. It is an age old ploy. It's a diversion. What they do care about are the rich oil fields of Saudi Arabia and the Persian golf states. Suppose Iran has nuclear weapons and goes and conquers those countries, achieving domination on a large chunk of the world's oil reserves.
You mention:
"MAD, mutually assured destruction, seemed to work to prohibit the use of nuclear weapons by the US and Russia."
It depends what 'seemed to work' means. Perhaps you have forgotten the Cuban missile crisis where the planet was on the verge of destruction? The Idea that MAD works seems to me similar to someone who once played heads-or-tails, it came up heads and they now believe that a flipping of a coin is an assured way to get heads.
The Soviet union had reasonable leaders who backed down. Arab leaders have proved that they won't back down even given assured destruction. This was seen with Saddam Hussein and who committed suicide over weapons of mass destruction he didn't even have, or
Gaddafi, or the direction Iran seems to be heading. If they are not willing to cave to international pressure now what makes you think they will ever back down?
What happens when Iran wants to put nuclear missiles in Cuba? My guess would be that the US would cave in that case. Giving a country such as Iran nuclear weapons means that they can do what they want unless you are willing to accept a hit on several of your major cities. Given the history of France and other countries fear of getting involved in wars even without any existential threat, it is safe to assume the US would need to fight any future war completely alone.
I would compare the current situation to a person with a possibly fatal infection in their leg. The leg sometimes needs to be amputated. If they don't the infection will spread to the entire body. But that doesn't mean amputation is a good outcome. It is clear that there will be many deaths, and a diplomatic solution is
extremely preferable. But if a diplomatic solution is impossible, then you have to amputate the leg, as painful as that will be.
(There are ways to make it less painful which were discussed in the previous discussion, for example methods of stopping the money-chain from Iran that will fund many attacks on civilian targets throughout the world. I'm assuming those measures won't be taken.)