Thanks for your post.
I would like to share very good read about Taiwan's nuclear program as another Chinese friend has mentioned about the Taiwan nuclear program predates ~1960.
Taiwan has requisite resources, expertise and highly skilled work force. Taiwan was hell bent to develop nuclear weapons not once but twice. She initiated its program to counter only china, especially after first test by China. China do not have any leverage to hamper the determination of Taiwan, who was once at the verge of developing nukes. China should thank USA for her restless efforts to force the roll back of Taiwan nuclear weapon program.
I hate to say but you are living in denial without admitting the harsh truths of previous Taiwanese perceptions about main land China. However i honestly admit that my knowledge about present Taiwan is limited. But as long as Taiwan maintain it self as an Independent nation or both have conflict of Interests about legitimacy over each other i will stick with previous perceptions. May be Taiwan is bluffing the International community and has already assimilated to china in a fear of stupid sounding Chinese law which will allow China to invade Taiwan without suffering attrition from Taiwan.
Today the situation is not better then before as far as growing military strength of China is concerned (as you mentioned yourself) for Taiwan. The situation will rapidly change if USA refused to provide whatever (wont go in detail, please read the PDF article) guarantee it has been pledging to Taiwan till today. Also with news of nuclear deal with Vietnam one can assume that USA is trying escape from his security guard duties of yellow sea by enabling nations like Vietnam to become self reliance and self protecting against suspicious Chinese military might. Why Taiwan will be an exception for USA not to help (underscore recent weapon deals) for its legitimate chronic nuclear aspiration specially when they do have such expertise to develop.
Regards
The previous two Taiwanese attempts were under KMT leaders who fought a civil war with the Communists and still harbor the dream of re-taking the mainland (BTW, their ashes are still waiting to be moved to a final resting place on the mainland after a future reunification).
I do not think the current Taiwanese administration is concerned with Chinese nukes because none of their stimulation of Chinese invasions feature scenarios of Chinese nukes being used and I have yet to read an article on future conflict seriously consider the prospective of a Chinese nuclear strike.
All those are with good reasons too. The communist party wants reunification mostly to boost their legitimacy at home and a nuclear strike will evaporate any legitimacy they so dearly crave.
To summarize the Taiwan's situation:
1) It does not seriously concern about use of nuclear weapon by the mainland.
2) It knows it can hardly hope to develop a nuclear weapon without being detected by China, at this age of satellite photos and cross-strait exchange.
3) It knows the Chinese government is compelled by law to launch an invasion if an Taiwanese attempt to produce WMD is detected.
4) If, as we assumed, its relationship with the U.S has deteriorated to the degree it no longer enjoys American nuclear umbrella or the U.S would refuse any weapon deal with it, it can't hope the U.S to come to its aid during an attack, especially if Taiwan itself has provoked the attack by developing WMD.
So why would Taiwan want to commit suicide by developing a nuke?
