Jeff Goldberg asks (and answers) the question:
Yesterday, on Meet the Press, Netanyahu told David Gregory that recent events have "unmasked" the true nature of the regime, and this is undoubtedly true: No one, not even the regime's apologists, believes that these men are secret moderates interested in seeing Iran rejoin the civilized world. So in one way, the regime's murderous response to dissent helps Netanyahu make his case that this is indeed a fanatic regime. But recent events also cut against Netanyahu's analysis, I think: The Iranian regime has exposed itself as interested mainly in self-preservation. Netanyahu told me earlier this spring that Iran is run by a "messianic, apocalyptic cult." But I think there's an argument to be made that Khamenei and Ahmadinejad are grubby men mainly interested in perpetuating their power. In other words, they seem to behave like rather quotidian dictators, not religious fanatics. A confrontation with Israel would certainly threaten the stability of their regime, and the stability of their regime is something they quite obviously cherish.
I think that last point is hard to overemphasize. Watching the video of Khamenei's performance last Friday at Tehran University--with Ahmadinejad looking on in his white wind-breaker from the front row--it was hard not to conclude that these are grubby little men. Dangerous, yes, but little all the same.