Its hard to imagine why Iran would want to attack Israel knowing that doing so would prompt escalation with aforementioned western hegemony, the USA, Germany, NATO allies, etc., unless you want to assert that Iran is just illogical and so chaotically evil they can’t function in their own best Interest, which doesn’t match the history of a western enemy who has persevered under decades of severe sanctions.

Maybe if the facts don't fit the theory, there's something wrong with it?

People want to win, gain power etc. . When the resistance to Israel dwindles, and its existence is a fait accompli ands its violent history long gone (just like, well, every other country in the world) then Israel; the zionists; the jews have won and Iran; the shiites; the muslims; pan-islamist have lost. You don't seem to fathom how important this is for religious fundamentalists. It's far more important for a lot of people than having a gold watch on their wrist or a Ferrari to drive.

In war and politics, not every outcome is clear or binary. Should Nelson Mandela and the ANC have given up their risky fight because they faced violent repression? Should Nazi Germany have diverted resources to aid Italy against Greece instead of strengthening their attack against Russia? Same goes for Iran and Israel. Not immediately having a perfect outcome doesn't mean the intent had to be totally different.

since countries like Saudi Arabia and Bahrain had been economically partnering with Israeli interests for a number of years prior to normalization, mediated through western partners, this points toward the preeminence of the economic element of global conflict over the religious justifications, which also throws your whole thesis into question.

No it doesn't. These are different people. The monarchies of SA and Bahrain are far, far more concerned with gold watches and Ferraris than they are with improving shia influence in the Levant.