We could defeat them, but Iran is a huge country with a big population. Defeating them would be one thing; if we had to do it, occupying them would be another.
I couldn't agree with you more. As a matter of fact, there is an article in this month's Naval Proceedings (one of the professional journals of the US Navy) about the difficult terrain and climate in Iran. It's also twice the size of Iraq, with a much larger population.
I'm not saying we couldn't do it, but it wouldn't be a walk in the park, particularly if we had to occupy the country after an invasion, which we almost certainly would.
The main obstacle may be political, and as usual, political concerns trump military ones. The popularity of the war in Iraq is at an all-time low, and I don't believe the American people would get behind a new war in the Middle East. If Iran found a way to attack America in a big way(perhaps by sending terrorists into this country, perhaps by sinking one of our ships in the Persian Gulf), then people might support a war, otherwise, I'm not sure they would.
Still, as you say, there are some very good reasons for the Iranian leadership to start a war, and they may end up forcing us to attack - or giving us an excuse to attack, depending on how you look at it.
- ThreeTracks
That is why we do not occupy most of it. We just occupy Kuzestan, their Gulf Islands, and use very heavy bombing, and a blockade. Iran's economy relies entirely on oil. If they cannot sell their oil they will collapse.