As much as I'd like to have a public option (primarily for its ability to force more robust price competition), I just don't see it as something to threaten nuclear destruction over. If insurance reforms are robust and low-income subsidies are decent, that's a huge win for millions of people, and it's a win we can build on. And contra Atrios, social legislation does have a history of getting better after it's first passed. Just ask Henry Waxman.
There's more to say about this. For example: most European countries rely on regulated private insurers of one kind or another to provide universal coverage, and they've managed to make this work. And: a credible threat only works if the opposition is afraid you might carry it out. But as near as I can tell, the folks who oppose the public option aren't really all that afraid of the possibility that healthcare reform sinks completely. Plus: the only way to get it is via reconciliation, and various comments to this post make it pretty clear that trying to pass a huge healthcare bill via reconciliation is probably impossible.
It's worth fighting for a public option. But it's not worth sinking healthcare reform over it. That would hurt too many real flesh-and-blood people who need this, and a second chance wouldn't come along for a long time. We've failed on the healthcare front too many times to accept failure again.