"What are Khamenei’s options? With protesters yelling “Down with the dictator” in the streets of nearly every city in Iran, his position could not be more precarious. He has staked his very legitimacy, and perhaps that of the edifice he sits atop, on forcing Iranians to accept Ahmadinejad’s supposed landslide victory. He can continue to try to force that down their throats with a show of raw power, or he can bend, which would show the opposition that he and the system are not really so powerful after all, that they are vulnerable to pressure from below. If he takes the latter road, it would be a radical departure from his style of governance up until now."
"This is uncharted territory for the Islamic Republic of Iran. Until now, the regime has survived through a combination of repression and flexibility. The dispersal of power throughout a complex system, among rival political factions, and with the limited but active participation of the voting public, has allowed a basically unpopular regime to control a large population with only limited and targeted violence."
For the rest, check out The Supreme Leader's Next Move.