Reinforcing what Joe just said, here is a review by Vali Nasr of the memoir of Shirin Ebadi, the recent Nobel Prize winner from Iran. It was originally published in New Republic On-line.
Besides criticizing Ebadi for not being able to really, fully break from the Khomeini revolution, Nasr provides a long and detailed account of the internal situaton in Iran. The conclusion is sobering but leaves some room for hope:
"What, then, of the search for democracy in Iran? It seems to be everywhere and nowhere at once. There is no other country in the region more suitable for the nurturing of the sapling of democracy. Iranians want democracy, and they cherish democratic practices. But there is no simple and straight path to democracy in Iran. The battle lines are unclear, and as the elections last year showed, open political contestation has favored populist authoritarianism over democracy, albeit through the ballot box. Talk of democracy in Iran is rife, especially in the West; but the reality is that Iran now has a stable authoritarian regime, and there is no obvious way to dislodge it.
It will be difficult to make up for the opportunity that was lost during the Khatami years. Building a viable movement for full and politically secular democracy will take time. It needs organization and coalition-building; but above all it needs a convincing and uncompromising message -- one that breaks absolutely with the legacy of the revolution and the nostalgia for its promise, and rejects any half-hearted attempts at reforming the theocracy."