First of all, one has to realize that international politics are purely Machiavellian - might does make right. Since the only enforcer of international law is the chronically fragmented UN there is precious little recourse if it is violated.
I sincerely doubt Iran has any plans to slow down their nuclear weapons capabilities program. There is no upside for the leadership of Iran in doing this - Gadhafi gave his up and was killed, Jong-Il didn't and could extort whatever he wished. These are but two examples of why getting the bomb is a very good idea seen from the standpoint of the Ayatollahs.
A nuclear Iran would certainly be bad for the western powers since Iran could effectively dictate policy in the neighborhood of the so called Shia crescent, currently extending from Teheran to Beirut via Damascus (which may soon be expanded to the Shia quadrant with the accession of Baghdad). Since Iran is both an OPEC member and highly dependent on oil exports for it's economy, a bomb would be a very good scare tactic against other major producers within reach such as Saudi Arabia, Abu Dhabi, and Kuwait to ensure a significantly higher crude price. It would also spark an arms race in the Middle East, which I highly doubt could have any positive outcome.
In essence, a Shia bomb must be averted. The current strategy of applying ever wider ranging embargoes will not work, just like it has not worked against North Korea, and didn't work against Iraq, Libya, Myanmar, etc. This means the US must attack and disarm Iran, and also overthrow the regime. It must be done before seismic sensors picks up the unquestionable signs of nuclear test; An attack afterwards is not possible since a regime fighting for survival would have little incentive not to use the ultimate weapon.
The casus belli for the US would most likely come in form of a terror attack on US soil akin last years thwarted attempt at the Saudi ambassador, possibly emulating a type of Iran-Contras situation involving Mexican drug cartels being fed Afghan opium via Iran. I hardly think the American population would sit idly by in such a circumstance. Of course, Iran would stage such an attack to ensure they have plausible deniability of involvement, and thereby split world opinion.
However, the US has everything to lose in an attack. To name but one detrimental effect: The oil price would certainly surge, and a high oil price is almost always followed by a recession in the US, thus placing further strain on an already heavily strained economy. Those who believe the US will just steamroll the Islamic Revolutionary Guard (IRG) and the Iranian military might be in for a nasty surprise. The western armies are wholly dependent on air superiority to avoid large manpower losses, and Iran can quite plausibly make that quite tricky by extensive use of various ballistic missiles and multiple SAM layers.
The first would be anti-ship missiles which all fleets are highly susceptible to as they almost always hit and destroy their targets. Carrier ships would have to sail out of reach of these with forward submarine and lighter surface vessels to ensure safety. Even then, it's quite likely that a few of the forward vessels are lost, and even a remote possibility that a carrier gets struck. Iran may not have these missiles today, but both China (which is pissed about the marines in Darwin) and Russia (which is pissed about the missile shield) could supply quite quickly. A cheap way for them to test their military materiel and knock the US down a few pegs. The second use of ballistic missiles would be against cities in countries which allow US airbases in their territory, which would quickly turn the populace of that country against such acceptance. Substantial casualties and massive costs is far from unlikely, resulting in a bankrupt and demoralized America.
A war is therefore too costly, but peace is too risky. Unfortunately, the current game of brinkmanship seems to be headed towards war, and yet another century seems to be set to start off with a major conflict.