In other words, they wanted a North Korea style deal to let them develop nukes while no one was looking. Look at what they were willing ot give up:
See what they explcitly offer. Now see what they are "willing to discuss":
Agree to give in on them? Nope. They just are willing to talk about them.
Bush has continually tried to make diplomacy a multi-national affair (see Korea, North and the Six Nations summits and Iran and the European Union talks) but, for all their kvetching about not wanting the US to be a global policeman, the rest of the world never seems to want to step up to the plate when Bush offers to let them in. The EU had the perfect chance to say to Iran throughout 2003 and 2004 that they would keep the US of them if they first gave up nukes and instead took the position that the US had to take pressure off Iran before they could be expected to give up nukes.
When an issue gets to be the US vs. (insert other country here) the rest of the world will mostly side with the other country. And blame the US for making a global problem all about them.
So, no, I do not blame Bush for having pattern recognition skills and not stepping into a trap.