Regarding the "onion thing":
The symbol consists of four crescents and a sword. The four crescents are meant to stand for the word Allah (there is indeed some resemblence to the Arabic writing of it). The five parts of the emblem symbolize the five principles of Islam. Above the sword (central part) is a "tashdid" (looks a bit like a W). In Arabic writing this is used to double a letter, here it doubles the strength of the sword.
The flag's centrepiece formerly comprised a lion with a sword standing before a reising sun, with a crown above, but all traditional flags and banners were abolished after the abdication of the shah in 1979.
There are Arabic writings in the border line of the stripes. These are 22 copies of the main Islamic phrase Allahu Akbar meaning "God is greater (than everything)".
It IS a sign of Arab domination -- what with the Arabic writing. The flag under the Shah was