I'd say it was a bit of a stretch to say that a war with Iran could cause a World War. Certainly the PRC and Russia (nearly wrote USSR there...freudian slip perhaps?) would look to protect their interests in the region (geo-political in Russias case and Oil in the PRCs) however I do not think that they would intervene directly against a US or Israeli based assault, however it is not too much of a stretch to imagine that lots of S-300s will suddenly find their way across the Caspian Sea.
Any war against Iran would be purely an air and naval war.
The naval war would be against lateral targets (suicide boats) and mines. The anti-submarine war would not take long to complete, in fact the Kilos will probably be sunk in port, likewise most of Irans actual naval fleet will soon find itself in pieces. However, merchants flying false flags dropping mines...a lot harder to find and kill and Midget subs could be a nuisance.
The rest of the naval war would primarily consist of lobbing TLAMs into the country.
The air war would be a lot more of a logistical nightmare, Israel has one shot before diplomatic pressures force Irans neighbours (in particular Saudi Arabia and Iraq) to shut their airspace. After that Israel is stuck either using Ballistic missiles or violating said airspace, and the longer it does the latter the more heat it gets from the international community.
Israel is no stranger to going it alone, and it's no stranger to doing something that will be unpopular in international opinion if it secures Israels borders and keeps it secure. However, its weakest link is the US, if it loses support from the US, the hungry wolves around it will be sure to start drawing up plans, I'm looking at Egypt here, since Syria is so screwed it can't even invade itself at the moment let alone the Golan Heights.
So any Israeli 'war' on Iran would be a strictly one or two night affair, and it would probably just delay the nuclear program rather than destroy it...to destroy it Israel would need to employ the Samson option, which no-one in Tel Aviv really wants to do because it would damage Israel more than it would Iran.
If the US follows Israel with strikes then the event drags out a bit more, the US has the logistical power and the airbases to attrition Irans airpower into nothing and then set about destroying every single nuclear facility that it knows of, as well as every single nuclear scientist it knows the location of. However, even then it may not be enough to utterly destroy the program but just to set it back by a matter of at most a decade.
The Russians and Chinese will both bluster in the UN and try to pass stuff in the General Assembly, but just about everything that comes out of the General Assembly isn't worth the paper its written on in terms of actual strength, what matters is what comes out of the Security Council, and the US can veto anything that the Russians and Chinese stir up in there.
I would be extremely surprised if the Russians actually got involved though, because there will not be a ground invasion, not unless Washington is feeling particularly suicidal. As Condie famously said once "Iran is not Iraq", and any ground war in Iran would sink any Presidents campaign for re-election, not to mention cause massive international blowback.
There might be enforced 'No-Fly Zones' like Iraq, but I think that it's quite unlikely, more likely that they'll just go in, blow up as much stuff as they can as quickly as they can and then get out.
It'll be quite lucrative for Russia and China though, because they will get the contracts to rebuild the Iranian Navy, Airforce and Army and they will get the political prestige of being able to condemn the US and/or Israel for the attack, thus giving them more support from anti-US Middle Eastern and African nations (which means more nice trade contracts, military purchases, and oil).
Is a nuclear armed Iran a problem?
That depends entirely on your point of view of the stability and mental viewpoint of the Iranian leadership, and I don't just mean Dinnerjacket, I mean the Ayatollah as well.
Would a nuclear weapon be used in a jihadist strike?
Well, wouldn't you? If you wanted to strike a major blow to your enemy in a manner in which they would not be able to recover for at least a decade (if not longer) and the cost would be the possible destruction of some of your people (a good portion of whom probably hate you anyway) or quite possibly just some airstrikes (depending upon whether the moral high ground is taken) then what a perfect idea a nuclear strike would be.
Furthermore, it would just deepen the divide between Muslims and other people in the fallout (literally) of the attack, thus creating the fertile grounds for more angry disaffected Muslims to join extremist cells and building up to an all out Holy war.
Of course, given the reliability of Iranian weapons, you'd need at least ten per target in order to stand a chance of hitting it, and you'd probably want to pick a target that's not expecting it...like Europe...rather than one who is and is armed with more ABMs than Moscow...like Israel.
That's what I would do anyway, if I were in Irans shoes and wanted to hit the west. But I'm not, and who knows what goes through the mind of Dinnerjacket and the Ayatollah.