I really thought Iran would come around with the election of Khatemi.I was wrong,they are no better than the Palestinians.
President Khatami is an improvement over what came before him, but his powers and freedom of action are not absolute. He is the elected leader of the secular, democratic part of the Iranian government. Ali Khamanei is the unelected leader of the religious part of the Iranian government. Khatami cannot renounce the Iranian revolution if he wishes to remain in power. His position as head of state means that when his country is threatened with war, he is obligated to defend it.
What he can do is to use what powers he has to move his country away from the fanatacism of the Khomeini era. In some ways there is a similarity to Gorbachev, who never really renounced communism but who nevertheless helped bring an end to the cold war. Threatening Iran with attack puts him between a rock and a hard place and is probably not in our best interests.