"are they looking forward to WWIII...or the final battle between "islam" and 'the infidels"?
Very very definitely the Final Battle. Not "merely" another world war.
But it's not just Ahmadinejad and the Shi'ite Iranian leadership. The Sunni Muslims have also been inundated for years with propaganda that the terrorism of Al Qaeda and others is part of the Final Battle.
See my FR homepage and my Links page for more information on Islamic End Time beliefs.
BTW, many imams are preaching that if/when there is a nuclear exchange, Allah will arrange the winds, etc. so that the blast will miraculously not destroy any faithful Muslims, and that radiation will kill only the infidels. I kid you not. I do not know whether Ahmadinejad believes such fantasies, but it would not surprise me one bit if he does.
If he believes no one blinked for his UN speech, and that a light from God shown on him, he probably believes the winds of war won't blow on Muslim countries. He's feels of chaos and death...