I got into a pretty nasty argument about this at a bar. This gentleman (who went on to rant angrily about many other things including Obama and libruls, but I'll leave that for another post) swore that Iran was a bastion of amicable West friendly government before the Islamic Revolution in 1979.
He even suggested that the Shah supported Israel and if it weren't for Khomeini and the clerics the two countries would have stayed pals and allies.
I objected (which enraged him), and proceeded to contest that while Iran was on much friendlier terms with the West at that time, and did have trade relations and other dealings with Israel, there's no way you could count the Shah as an active supporter and proponent of the Israeli state. In fact, I said no iteration of Iranian government has ever really cottoned to the existence of Israel.
It's one thing to do business with them, but it's another thing entirely to endorse and champion them.
So after a bit of google fu research, I'm not as sure as I was when I made the initial statement. It seems that there may have even been enthusiastic economic dealings between the two during the Shah's reign after all, and that could maybe kinda sorta be considered active support by some metrics. But I only got as far as Wikipedia, so yeah.
So did I have it wrong? Was the Shah a good guy who liked Israel and worked to bring them into the fold?
EDIT: Khomeini Khomeni Yoheinie
There was definitely a strategic relationship between Israel and Iran--largely through the U.S., but there was bilateral cooperation as well. In fact, Israel even made efforts to resume this relationship post-Revolution. The less reported aspect of the Iran-Contra affair is that Israel worked as the middle man. Their leaders hoped to build back up a strategic relationship that was lost in the Revolution. Publicly, they expressed distaste for each other (Iran's contempt for Zionism; Israel's dislike of Iran's policy of "exporting revolution"). But they engaged in highly-sensitive negotiations fairly early in the process. There are a number of books to read about this and I'm kind of randomly pulling one from my bookshelf: Ali M Ansari's Confronting Iran.
Ansari also goes a bit into the earlier relationship, which more directly addresses your question. He describes the Sah as pro-Western and "tolerant" of Israel. Israel sent the Shah a Biblical parchment referring to Cyrus the Great when his son was born. Israel criticized Carter's actions in the early days of the Revolution, saying the U.S. should have done more to support the Shah. In fact, the Israelis concluded from the fall of Iran (i.e. the Shah) that "the next government, whoever its leader... will terminate most, if not all, aspects of the carefully constructed and close Israeli-Iranian relationship" and that "Israel cannot in the final analysis depend on Washington. So, there was definitely a close relationship between the two countries, even if it's better to call it practical rather than friendly. If you're just speaking rhetorical, that's a bit different.
Not every decision is ideological or necessarily driven by domestic politics (particularly when it's not a democracy). The relationship was strategic.
Liking Israel doesn't make you a "good guy" and world politics is more complicated than good guys and bad guys.
According to a Swiss Court Israel still owes Iran a billion dollars for oil from those days. I believe Iran was one of the first countries to recognize Israel and jointly developed ballistic missiles etc but the Shah and Israel also competed in alliance with the US. Depends on what you mean by "cottoned", Iran had the same position as pretty much the rest of the world and US (formally and officially) with respect to Israel, namely that the rights of Palestinians had to be recognized for peace. The Shah paid Arafat a million bucks at one point. And there are YouTube videos of him resenting pro Israeli lobbyists in Washington. And it was true too.
The Shah and Arab nationalists like Nasser didn't get along so much.