Iran's interest in nuclear weapons is both wide and deep, but it is not adamantine. The issue, as always in politics, is not whether Iran wants to see its nuclear program through to completion, but what it would be willing to sacrifice to keep it. On this matter, I believe the Iranians would be willing to sacrifice a fair amount, but not everything. This suggests that convincing Iran to give up its nuclear program is going to require considerable inducements, both positive and negative, but that doing so is not impossible.
The events of this past summer, unfortunately, appear to have strengthened the hand of President Mahmoud Ahmadinejad and Iran's radical hard-liners. The continued deterioration in the U.S. position in Iraq, coupled with the seeming "victory" (at least in the minds of Arab publics) of the Iran-backed Hezbollah militia in the Israel-Lebanon conflict, has made Tehran feel more secure in stiffing the international community. Iranian leaders seem confident that, with the U.S. military bogged down in Iraq and the American people unsupportive of that mission, Washington would not dare attack them.
Likewise, Hezbollah's "victory" appears to have proved the hard-liners' contention that Iran could adopt an aggressive strategy in the region that would raise their country's standing without undermining its position in the UN Security Council on the nuclear program. Indeed, Russia and China seem less willing now to sanction Iran than they were at the beginning of the summer.
In addition, the regime has done a good job with the Iranian public in building the case that the nuclear program is peaceful, and that United Nations efforts to block it are nothing but another Anglo-American plot to keep Iran from enjoying its rightful place in the international hierarchy. As a result, Iran's more pragmatic leaders seem to have little to stand on, and thus the likelihood of Iran compromising seems low in the near term.
That said, the importance of hewing to the diplomatic line for as long as it offers any reasonable hope of success is trebled by the poverty of the alternatives. In particular, a military operation against Iran would be anything but the surgical strike some of its proponents claim. Instead, it would require a massive campaign against a range of targets. It would inevitably provoke an Iranian asymmetric response—terror attacks or piling on the insurgency in Iraq, where the United States can ill afford additional problems—which in turn would require further retaliatory military strikes by the United States.
And because the initial operation might only set Iran's nuclear program back by two to four years, Washington would have to be ready to mount additional strikes whenever the Iranians began reconstituting their program. Without greater certainty of success, a protracted diplomatic struggle, and even a drawn-out contest of wills over sanctions, would be far preferable to another open-ended conflict in the Middle East.