I can agree with you on this point in that you would not be able to nuke the entire middle east. It would be incredibly hard to define a target area to attack however ideally you'd target terrorists. The idea behind nuking the middle-east is that there would be an enormous spike in death that causes an end to the continuous number of deaths over the years.
no, besides the nuclear fallout destroying everything around it like europe, russia and east asia as well the middle east and probably the americas for years, and we don't account for the huge humanitarian issues the world would hold against the nuker and possibly destroy the world economy and stability with that, it would only create a ton more deaths and a whole lot more internal chaos in that region
nuking is not a viable option unless you want to destroy the planet