The White House is

downplaying and disparaging Seymour Hersh's report in the current New Yorker to the effect that the USA is comtemplating the use of tactical nuclaer weapons against Iran's alleged atom bomb program.
Nuclear non-proliferation is a complicated subject, it admits deterrence theory, lots of hard science and many many unhappy political realities. It is also a depressing unsexy topic that is normally shunned by most of the punditariat.
That having been said I'll offer a few disparate notes on the topic:
It is an inherent contradiction to believe nuclear weapons can be actually used in order to restrain or suppress a particular nuclear weapons program. Their use automatically invalidates the policy goal in extremis.
That having been said nuclear weapons do have their uses however horrific from the policy standpoint. It is the threat of their use that restrains various actors...if the threat is both credible and paradoxically never acted upon. The US made very credible nuclear threats during the Cuban Missile Crisis, the USSR made similar threats against the PRC during the Sino-Soviet Border dispute in 1969.
Threats work-under carefully defined circumstances.
What I think is going on here is that the White House is initiating one of those threats in order to get some leverage over Tehran. They are using a non-Administration source and an opposition publication which only puts said threat in bold highlight.
Indeed Bush doesn't have much wiggle room here, his popularity is pegged at 35% or so...Iraq has errupted into Civil War, the GOP's congressional corruption has been exposed and he doesn't have the horses to take down Iran from a conventional combat standpoint.
Nor does sanctions hold much terror for Iran, not as long as the world thirsts for their oil.
For that fact, a nuclear threat against Iran has limited utility due to the fear of radiological contamination of their oil reserves.
But Bush has few cards to play in a situation he has beautifully bungled from day one.
I think John Kerry may have the right idea, try and drag Moscow and Peking into a coalition to restrain Iran's atom bomb program. It is certainly worth a try, but doing this will require some serious diplomatic heavy lifting....and that is not President Bush's strong suit.