Nuclear weapons in the game should behave as nuclear weapons in real life.
Effects of a nuclear blast should be based on distance from the detonation, not on which countries border the target country. Countries within that distance should be affected, especially from radiation.
As for losses, of course there's the immediate lost from the blast, which should be relative to the distance in the real world. So, if a nuke blast in the real world affects an area of 30 miles of blast and shockwaves, it should in the game. Radiation, which takes more time and may not be immediate, should also affect hundreds of miles around. All cities/countries within that range should be affected.
Andy, I believe there should be severe penalties for using nuclear weapons. I am a proponent of nukes in the game, so this is coming from a place of realism than anything else.
In the real world, right now, if a country nuked another country, there would be extreme blow back against them in every way from the rest of the world. However, if it's a situation like WW2, many in the world may not condemn its use.
So, maybe a nuclear attack without merit (based on war index?) leads to severe rebellions in the attacking country? If the war index has fallen significantly, maybe no rebellions? Or it could be based on the amount of damage accumulated in the duration of the war. In a quick war it is possible for large damages, but especially wars with similar foes, where the amount of damage can be a lot and accumulate as the war continues... at some point it leads to desperation and the people just want the war to end.
I don't know. Maybe what I'm suggesting may be difficult, but these are my thoughts.
...and YAY.