I think Iran will be referred to the Security Council. However, the Russians and the Chinese really have opposing interests to the west here. For one thing, their economies are fragile and it would hurt them a lot to embargo Iranian oil. For another, an Iran which is a serious thorn in the side of Israel, the U.S., and other western nations isn’t a bad thing.
So expect a replay of the Iraq war. China and Russia will play games, stalling final votes, demanding more evidence, yada yada. The Iranians will play along, offering last-minute compromises that mean nothing, announcing that they’ll stop enriching (and then starting again after some manufactured incident), etc. This will drag on until either the U.S., with or without allies, decides to take action without the blessing of the SC.
The wildcard here is Israel. Israel might decide to take matters into its own hands and attack Iran. Perhaps the threat of that will actually spur the Security Council into action this time, or perhaps they’ll just go ahead and do it, sparking widespread riots in the Middle East and giving the U.S. Middle East democracy project a world of grief.
Another possible outcome could be for the Security Council to agree to a milder form of punishment that doesn’t hurt China and Russia as much. Sanctions of some kind, stopping short of an economic embargo. The question is whether or not that will actually affect the leadership of that country enough to get them to capitulate. And that depends on how strong their grip is on power.
Ultimately, what should be done comes down to your belief in the nature of the mullahs. If you think they are shrewd guys who are just posturing in order to get something, you might argue for compromise. On the other hand, if you take their rantings at face value, then they are an apocalyptic cult that are attempting to get nuclear weapons as the first step in kicking off the events (starting with the destruction of Israel) that will bring about their version of armageddon, after which their kind will rule the planet.
What would you be willing to do to stop, say, a country ruled by Pat Robertson from getting the Bomb? These guys make Pat Robertson look sane and peaceful.