The head of Iran's armed forces (general Ataollah Salehi) admitted publically that some of his troops were openly backing reform groups. These are the same reformers who are being jailed, prosecuted and sometimes executed for openly calling for an end to religious dictatorship in Iran. General Salehi was just admitting what most Iranians already know; that many Iranians want some political changes, have wanted them for over a decade, and are getting impatient.
The Iranian armed forces contains about 540,000 troops. In addition, there are 120,000 troops in the Revolutionary Guard (who perform para-military and secret police functions, as well as monitoring the loyalty of the armed forces.) Finally, there is the Basij, a part-time militia containing about half a million partly trained and somewhat organized men, although only about 18 percent of them are on active duty at any one time. In theory, millions more men and women have signed up for Basij service, but most of these lack training, and increasing number may lack loyalty to the religious dictatorship. There are many government loyalists in the military, but the size of the Revolutionary Guard and Basij shows how uneasy the senior clerics are about the loyalty of "the people."
Inside Iran, a majority of the population opposes the government. Attempts to cajole or bully this majority into changing their mind, have not worked. The problem is that most Iranians are fed up with the "Islamic revolution," and want less religion and corruption, and more democracy and economic growth, from their government. Since the clerics running the government, as a dictatorship, could be prosecuted for corruption if they allowed free elections, there is no incentive to loosen up. In Iraq, most Shia Arabs, like most Iranians, have rejected the concept of a religious dictatorship.
There is not a lot of enthusiasm for another revolution or civil war, and the government knows it. The government has also, for two decades, been studying the mass revolutions of 1989, and the 1990s, that brought down all those communist dictatorships in Europe, and believe they have developed methods of preventing a similar fate for themselves. Unlike the former communist states, the Iranian dictatorship has the loyalty of 20-30 percent of the population. This is where the Revolutionary Guard and Basij come from, and a lot of these guys are willing to die to maintain the clerical dictatorship in Iran. The communists of 1989 had lost most of their true believers, so a mass revolution in Iran will have to be a bloodier affair, and also be a battle between Islamic radicals and moderates (including non-Moslems). The senior clerics appear willing to fight to the death, and their opponents are, more and more, willing to deal with that head on. Meanwhile, no matter how successful the government was in suppressing the demonstrations in the capital, it was a defeat for the government. More people were radicalized, and dissention in the clergy became visible. The Iranian Islamic radicals are losing. Long term, they are lost. But like any tyranny in decline, there's the danger that the clerical dictatorship will go out with a bang, not, as the Soviet Union did, with a whimper. And if it is with a bang, it could be a very loud and destructive bang if the clerics have nuclear weapons.