The Spread of Nuclear Weapons: More may be better

If deterrence fails for whatever reason, then both sides still have every incentive to start off with smaller weapons enabling them to escalate upwards if necessary. Moreover the reasons not to go to war (M.A.D) are still there when it comes to a possible escalation in a conflict. Each escalation makes the possibly of mass destruction more likely so if anything the incentives for de-escalation grow as there is escalation towards a nuclear war.
“Defensive deployment, if it should fail to dis-suade, would bring small nuclear weapons into use before the physical, political and psychological environment had deteriorated. The chances of de-escalation are high if the use of nuclear weapons is carefully planned and their use is limited to the battlefield.” [[Waltz, http://www.mtholyoke.edu/acad/intrel/waltz1.htm]]

If a conflict has occured between two states which both possess nuclear weapons, does this not demonstrate that deterrence has NOT worked?
And that each escalation makes the possibility of mass destruction more likely is something that might not necessary be the deciding factor for one state to call a quit to to conflict. No state wants to back down when the other refuses to - a situation India might find itself in with Pakistan. The assumption that any conflict will rapidly de-escalate is, much like deterrence, nothing more than a theory which is highly dangerous given the consequences if the theory does not stand up in practice.
Let's return now to the issue of India and Pakistan, which is one which breaks the assumption that many theorists have that nuclear weapons states will not go to war with one another even with conventional weapons due to the fear of the possibility of this escalating into nuclear weapons exchanges occuring. Pakistan is not playing by the rules and has a 'first use' nuclear weapons policy. Sure, they may be bluffing, but Pakistan's use of nuclear weapons in order to have a 'one-up' on India to make up for their serious strategic inferiority to India is something that is likely to ESCALATEESCALATE rather than de-escalate a conflict between India and Pakistan.