This study presents a comprehensive finite element investigation into the design optimization of an ultra-high temperature ceramic matrix composite thruster for green bipropellant systems. Focusing on ZrB2–SiC–Cfiber composites, it explores their thermal and mechanical response under realistic transient combustion conditions. Two geometries, a simplified and a complex full-featured model, were evaluated to assess the impact of geometric fidelity on stress prediction. The complex thruster model (CTM) offered improved resolution of temperature gradients and stress concentrations, especially near flange and convergent regions, and was adopted for optimization. A parametric study with nine wall thickness profiles identified a 2 mm tapered configuration in both convergent and divergent sections that minimized mass while maintaining structural integrity. This optimized profile reduced peak thermal stress and overall mass without compromising safety margins. Transient thermal and strain analyses showed that thermal stress dominates initially (≤3 s), while thermal strain becomes critical later due to stiffness degradation. Damage risk was evaluated using temperature-dependent stress margins at four critical locations. Time-dependent failure maps revealed throat degradation for short burns and flange cracking for longer durations. All analyses were conducted under hot-fire conditions without cooling. The validated methodology supports durable, lightweight nozzle designs for future green propulsion missions.