"Hence the guerilla side also loses its victory condition. This is a scenario I'd actually like to see, since it might put an effective end to the kind of fighting we've seen in the middle east."

As a Finn, this is exactly the kind of stuff I don't want to see. Russia can win conventional war against Finland any day, if Finland would be absolutely certain to lose also the ensuing guerrilla war, we would lose our independence without fighting. Maybe not de jure independence, but practically yes.

Nukes are unusable as you said. This has not prevented conventional arms race and it's usage for proxy wars during cold war. It's unlikely it would do so in future. It might even make the whole situation worse, as now you can supply the "mujahideen" with so much more potent weapons. And you need less popular support to maintain similar levels of guerrilla activity.

Damn I hope I'm wrong on that. The possible counter could be autonomous aerial denial weapons. If they get better than autonomous assault weapons, we might actually see more peaceful world in the fashion of Kant(1). It might mean that Taleban might rule Afganistan again. But it would also mean that Russia can't wing Georgia, Egypt can't win Israel and Iran can't win Iraq. Westphalian utopia. :D

[1] https://www.mtholyoke.edu/acad/intrel/kant/kant1.htm It's really awkwardly worded essay, but the point is that if everybody defends and nobody attacks, we can get resilient world peace. With the downside of occasional minor conflict, but also with no "world government". If you start to think the election of president of world government, the whole idea seems pretty obviously oppressive and potentially very totalitarian.