We seem to be in accord. You and I both dislike the very thought of war and the destruction that it brings, but when faced with the necessity of waging it, do so with the intent to end it as expeditiously and - for lack of a better term - as ruthlessly as possible.
As my mother used to say, "Never be a bully. Never start the fight. But once it is started, by God, you'd better end it."
Part of your proposition is, in fact, already in place. In 1998, President Clinton signed Presidential Decision Directive 60, allowing the use of nuclear weapons in response to a terrorist biological or chemical attack. There is a lot of screeching and wailing going on now about Bush's reiteration of standing policy, but when it was first announced, it was not even a blip on the radar screen. The option to go nuclear was never off the table, but this directive made it more evident to the world.
While my expeditious side would embrace your proposition to announce a policy similar to "MAD," the cautious side of me urges me to refrain. As a Roman Catholic myself, I would be hard pressed to not take arms against a country that destroyed the Vatican because Catholics elsewhere in the world commited heinous acts. I have reservations that several countries presently in the "America" column would instantly switch sides should this occur. And if we consider that there are maniacs abroad trying their damnable best to bring about a full-scale Muslim uprising against America, they might even double their terrorist efforts to facilitate this result.
Here is my prediction for the unfolding of events (that and $1.50 will buy you a paper in most cities):
1. Hans Blix, former leader of UNMOVIC and current leader of the UN Inspection Team, will issue another report to the UN. The same curious suspects will vacillate.
2. The US will launch their "shock and awe" campaign two weeks later.
3. The fighting will last three months.
4. The cleanup will take two years.
5. We will have at least two additional terrorist attacks here in the US, one probably during the campaign and one after the campaign. My gut tells me this thing isn't over; that, sadly, 9-11 isn't the end of it. The Palestine Liberation Front of Abu Abbas (based in Iraq), in concert with Al Quida, seems like the most obvious perpetrators.
6. Based on what we discover in Iraq within the first four months of occupation, Bush's 2nd term will be decided.
7. Iran and North Korea, backed by China (not necessarily Russia), will start the drumbeat against the US and seek sanctions through the United Nations. The posturing could elevate rather quickly from there, bringing about the extremely unpleasant scenario you noted above, particularly since Taiwan and Japan have already started rattling sabers on behalf of the United States.
From there, who knows...?
The reason I treat Saudi Arabia, specifically Mecca and Medina, as targets, even though they are alleged allies is that I have read and studied the Koran. While the administration does not want to pose this war as a war against Islam, it is just that. Islam teaches world domination moreso than did communism, and the centers of the madrasses or schools where radical Islam is being taught is Saudi Arabia and Pakistan. They are allies only because we hold the ruling elite in power, and this will not last. Then we will be dealing with two more, and more frightening Irans. Better to get the nuclear policy on the table now. Islam cannot exist without Mecca, and the Imams will find some way to teach a new version of Islam that doesn't require world domination if we make it clear that any nuclear, chemical or biological attack on our homeland will be met with an atomic attack with notice on their Holy sites.
Again, I am basically a dove. But Islam is a very dangerous religion when followed as written. And as the stress between the West and the Islamic nations increases, more and more people that are Islamic in name only will turn to their Korans and actually read them. There they will find the directive to conquer all non-believers and then kill or heavily tax those that will not convert. The entire thrust of the book is to divide the world into two spheres: that territory under Islamic rule, and that territory yet to be brought under Islamic rule. And as you probably know, Mohammed himself set the example that the sword is the way to bring land under Muslim rule. The prophet of the West died on the cross rather than raise a hand to hurt his oppressors, and his doctrine soon ruled most of the civilized world. The doctrine of Mohammed is talk first, and if you don't succeed, behead the kafir.