It an ok theory, but as soon as tactical nukes are used, it would be inevitable that full fledged nuclear war began.
WWII in the Battle of Britain began as "strategic bombing" but eventually turned into the bombing of anything and everything. If a war ever started and someone decided to try tactical nuking, I would prepare for the end.
With that said, in the FO world, nuclear war could have been inevitable as well, with the shaky world politics and resource wars.
Actually... that is exactly what military historians are debating..
Was the MAD doctrine effective in preventing a nuclear war..? Thank God we will never know.. I do feel that it helped certain conflicts from escalating or prevented militairy intervention by both the US or The USSR during the cold war (Nam,Afghanistan and the cuban missile crisis spring to mind)
I don't have any empirical proof for it.. however nor does the notion that the use of tactical weapons would escalate an ongoing conflict.
The problem with the premise you put forward is that you compare an escalating conventional war... with a theoretical situation.. in which we know both the attacker and the defender would be destroyed.
And I actually disagree. Germans started bombing large English cities to induce fear. The bombing of Hamburg and large industrial cities, disgusting as it might sound, were in the beginining of the US/RAF campain mostly aimed at both factories and workforce. It was not until the end of WW II that both nations started to also target pure civilian targets to hasten the end of the war.
However... there is a large difference between our world and the picture painted by the FO world, which would make it more likely to cause a apocalyptic nuclear conflict.
There is isolationism at a much larger scale than in our world, broken as it is we are at least still talking other nations in the UN.
There is a much larger use of nuclear power.. thus even a conventional war could lead to a lot of nuclear collateral damage.
There is a chance we don't know anything about the MAD doctrine.. Hence we believe that China only has a limited first strike capability and that we have a full blown first as well as a second strike capability.
My point is that in a normal setting a full out nuclear war was nor is very likely and that a conventional war would be more likely, however the FO universe does not fit our convention..