“But actually using the nukes (which are likely to be few in number and of limited yield) will inevitably lead to Tehran being turned into a crater. Not worth it from the perspective of the Supreme Leader.”
Right. Not worth it - now. Maybe in another 5-10 years when they have a sophisticated arsenal. It would be a dumb move at any time - better to keep them as a deterrent, but that assumes a rational government.
But if they should nuke Israel what would the fallout pattern (radiation, not political) look like? Would they care? Would the Saudis? If so, that could be a game changer.
Any radioactive fallout would be a tertiary concern in case of nuclear war between Israel and Iran anyways, the primary effects are likely to dwarf the impact of fallout by orders of magnitude.
The leadership of Iran is more stable than we think. Ahmadinejad is merely one in a string of puppets keeping up appearances for the Supreme Leader, who is the real power in Iran (and always has been). Hence , I give his rants little weight. It all comes down to what the Supreme Leader and his followers want the nuclear weapons for.
I personally doubt that he wants to go down in what would be the equivalent of a nuclear suicide bombing. Especially now that the strategic possibilities in the region offer Iran a buffet of opportunities to extend its power without open war. But who knows?