After the events that took place over the weekend (article) I do not know how anyone can view Iran's current form of government as a Theocracy (or at least view it as such w/a straight face).
The current gov. needs to diffuse the situation, and give concessions. Instead they kill and arrest the very people who will act as symbols to inspire the protesters to take protesting to the next level.
Iran will have a full blown revolution on their hands, and come 2010, the veiw of Iran as most Americans currently know it, will be no more.