No. of Recommendations: 1
A failed state of warring factions is going to be problematic for Israel, for the same reason that a quisling would be an issue - in the long-term, it can be unstable.
A Quisling serves as the focus for opposition groups to unite against. How could the Shah be overthrown, with the army and SAVAK at his command?
A failed state can certainly be fertile ground for another AQ or ISIS to form. Israel is probably betting that Mossad and the CIA can keep stirring the pot, knocking down any organized group that starts to form, by inciting another group against them. The people of Iran will live in desolation, unless they decide to move to Europe, and forces are uniting to slam that door in their face too. Think of Haiti as the US/Israeli ideal for the future of Iran.
Steve