I honestly feel this song is about the possiblity of a terrorist nuclear attack on NY.

There's already a scar on NY. Then another flare appears, one which you should not look at:

"But I won't look at that scar."

This song is about Bowie's seething hatred of the murdering terrorists who become famous as killers.

"I've discovered a star
a new killer star"

The word "star" is a double entendre, I feel. It refers to those who become famous martyrs for suicide bombing, and to the Biblical sign in the sky as a harbinger of cataclysmic events.

The saddest line in the song is

"Oh my nuclear baby"

Could this be a reference to Bowie's child, dead in a nuclear attack?

As a modern day minstrel and prophet, Bowie must spread the news of a possible nuclear attack. This is something no one can prepare for.