Hey anonymous, check out this article that puts the spying case more into perspective.
The conflict is age-old, between the Pentagon and the State department, as I am sure you already know. But this does not mean that there was no spying or that US policy circles that does not blindly swear by Israel are not a bit pissed off.
I think this selection from the above mentioned article, written by Tom Barry (whose site you should absolutely check) pretty much wraps up the importance of the event:
Without notifying the State Department or the CIA, Feith’s office has been involved in back channel operations that have included a series of secret meetings in Washington, Rome and Paris over the last three years. These meetings have brought together Office of Policy officials and consultants (Franklin, Harold Rhode and Michael Ledeen), an expatriate Iranian arms dealer (Manichur Ghorbanifar), AIPAC lobbyists, Ahmed Chalabi, and Italian and Israeli intelligence officers, among others.
Franklin, an Iran expert who was pulled into Feith’s policy shop from the Defense Intelligence Agency, met repeatedly with Naor Gilon, the head of the political department at the Israeli embassy in Washington. According to U.S. intelligence officials, during one of those meetings, Franklin offered to hand over the National Security Presidential Directive on Iran. For more than two years, an FBI counterintelligence operation has been monitoring Washington meetings between AIPAC, Franklin and Israeli officials. Investigators suspect that the draft security document was passed to Israel through an intermediary, likely AIPAC.
Franklin, who is known to be close to militant Iranian and Iranian-American dissidents, is the common link to another series of meetings in Rome and Paris involving Ledeen (an American Enterprise Institute scholar who was a special consultant to Feith), Harold Rhode (a cohort of Ledeen’s from the Iran-Contra days, who is currently employed by Feith to prepare regime-change strategy plans for Middle Eastern countries on the neoconservatives’ hit list), and Ghorbanifar (an arms dealer who claims to speak for the Iranian opposition). These meetings addressed, among other things, strategies for organizing Iranians who would be willing to cooperate with a U.S.-spearheaded regime change agenda for Iran.
Oh and this is another one.