It was not one of several plans, it was THE doctrine of Op REFORGER: Keep Russian advances contained, if they archieve a major breakthrough for their Operational Maneuver Groups plug that breech at any cost. And in the context of nuclear sharing, German forces would have participated in that. On both sides of the GDR border.
Did it ever happen? Did I miss that day in history class? No? Oh that's right. It STILL Has never happened. The THREAT of nukes is one thing. Nuking your own country is another. Noone's ever done it. And as has been pointed out even in these insane "oh it was the plan" proposals, they would be targeted at huge advancing armys. Not citys of your own people that may harbor a few 100 to 1000 terrorists amist 1000s to 100,000s of your own people. It's not the same thing. It's absurd.
That on the other hand is true, what few descriptions we have of the Ghost Dance War say it was some sort of magically augmented guerilla campaign. How those few natives would mount a successful war against the whole US military (which had significantly more manpower when SR First Edition came out) on the other hand...magic? 

Because at the time Magic was an unknown military force multiplier that could not be easily contained. When Howling coyote walked out of the detention camps troops were emptying machine guns at him and the bullets just bounced off. Then they blew up multiple volcanoes across the us. They basically stepped up and went 'We have a new super-weapon YOU DON'T HAVE. Do what we say or we'll F you up"
The US couldn't say they COULDN'T do it, and after the GGD demonstration, they couldn't risk it.