While Im not going to mix words about what the Iranian president said or didnt say, I will point out that the fear from Iran developing nuclear weapons is further proliferation. While I am sure there have been backdoor warnings to both Iran and N. Korea basically saying if you fire a nuclear tipped weapon in anger, we will turn your country to a glass parking lot.
The nuclear fraternity is a rather small one, and it is better if kept that way. If it were up to me, they would be eliminated entirely. But that pandoras box is already opened and there is no shutting it.
The notion that Islamic terrorists wouldnt if given the opportunity destroy Jerusalem because it is also the home to the three major religions is a bit short sighted in my book. Now Mecca, I can handle that. But the fact that they are willing to blow up the Mosque in Samarra tells me there seems to be little regard for that in practice.
Again, this is about proliferation. If Iran builds nuclear weapons, they give it to organization Z, and that device is moved to any internation local and set off will be a horrible day in the history of mankind.