Let them revel in their glee. It will be short-lived. G.W. Bush does not take this kind of in-your-face arrogance lightly, and if this terrorist scum thinks the Israelis have softened to the point of allowing Iran to go nuclear, he has one last think coming.
Israel would have attacked by now if it were feasible. It's pretty clear that Iran isn't building the bomb in someone's driveway. The components, labs, and other facilities are spread out across the country and well-fortified. It's not like Osirak. There's not much that Sharon can do unless his military can come up with a scenario where all the facilities can be hit at once, and that's just not possible unless we join them. At this point, however, we don't have any political capital left to accomplish that without starting Armageddon (assuming retaliation against Israel). There's also considerable concern that an attack on Tehran will encourage the Iranians to take back the disputed territory of southeastern Iraq which is flush with oil.
The most difficult aspect of this, politically, is that we cannot come out and label this guy a despot when the world thinks he was "democratically" elected. I can't remember myself ever being this pessimistic about our foreign policy goals, but if this guy is serious about his rhetoric, we're going to have to start assessing what losses we're willing to accept in order to protect the world from the Islamofascists. The traditional understanding of "world war" is just around the corner...