The Fallon resignation has lots of folks spooked, including US News.
I continue to think that Bush isn't crazy enough to pull the pin on this just before the elections. The one caveat to this is that we may not know what he knows, but it's far more likely that he's simply trying to pressure Iran into a real negotiation.
Firing Fallon (well, OK: leading him to the edge and inviting him to jump) is just the sort of thing that will allow the low-level negotiators to mutter to their Iranian counterparts, "You know, I just can't tell what he might do. I'm worried for you guys..."
The problem is, the Iranians can do the math as well as anybody else. They may be willing to absorb the temporary loss of their nuke program in exchange for vastly enhanced power in the Middle East and a consequent reduction in US power.