By the looks of it, just change:

instantiatedProjectile.velocity = transform.TransformDirection(Vector3 (0, 0, initialSpeed));

to

instantiatedProjectile.velocity = Camera.main.ScreenPointToRay(Input.mousePosition).direction * initialSpeed;

Ok I figured it out. Below is the code that works for me. If anyone is going to set this up in their game I would say go a step further and add a cross hair that runs accross the ground and put the game object with this script attached to the ground cross hair that way when ever you do the air strike it shoots down onto the object.

var projectile : Rigidbody;
var initialSpeed = 20.0;
var reloadTime = 0.5;
var ammoCount = 20;
private var lastShot = -10.0;


function Fire () {
    // Did the time exceed the reload time?
    if (Time.time > reloadTime + lastShot && ammoCount > 0) {
        // create a new projectile, use the same position and rotation as the Launcher.
        var instantiatedProjectile : Rigidbody = Instantiate (projectile, transform.position, transform.rotation);

        // Give it an initial forward velocity. The direction is along the z-axis of the missile launcher's transform.
        //instantiatedProjectile.velocity = Camera.main.ScreenPointToRay(Input.mousePosition).direction * initialSpeed;;

        //Sets up the RayCast to the direction of the cross hairs
        var ray = Camera.main.ScreenPointToRay(Input.mousePosition);
        var hit : RaycastHit;
        Physics.Raycast(ray, hit);

        //gives position of the RayCast
        instantiatedProjectile.MovePosition(hit.point);

        //gives the initial forward velocity
        instantiatedProjectile.velocity = ray.direction * initialSpeed;

        // Ignore collisions between the missile and the character controller
        Physics.IgnoreCollision(instantiatedProjectile.collider, transform.root.collider);

        lastShot = Time.time;
        ammoCount--;
    }
}