I believe it. Remember that Israel is surrounded by nations and people whose sole mission in life appears to be the destruction of Israel and the extermination of all Jews (the destruction of the "Great Satan" USA being a close runner-up). With Israel, it's not just about deterrence but about their very survival. If a nuclear bomb went off in Washington D.C. or New York, the United States can still function as a nation. If a nuclear bomb went off in Tel Aviv, all is lost. You can bet that they are prepared to annihilate anybody who threatens them with a nuclear bomb.
Which leads me to believe that Iraq isn't anywhere close to nuclear capability. If they were, Israel would have already acted. You only need to look back to 1981 for an example of Israel's resolve to ensure that nobody in the Middle East poses a nuclear threat to them.
The new Israeli army chief of staff said the other day that he doesn't lose sleep over Iraq. Again, maybe that's just propaganda, but I think you're right that in the medium term Iraq does not have nukes.