There's a good article over at CiF on the possibility that Ahmadinejad is on his way out.
I'm going to flesh out the comment I left there to address a couple of points.
Those arguing that Ahmadinejad current position demonstrates the success of Bush's confrontational approach are being marvellously selective in their analysis. As I've already said, any realistic assessment of Bush's approach to Iran should start with the "axis of evil" speech in 2002. At that time, Iran's President was Khatami, a relative moderate who introduced the concept of "Dialogue Among Civilizations".
After the invasion of Iraq and in the face of continuing hostile rhetoric, Ahmadinejad was elected in 2005. Now, there are signs that Iran's Supreme Leader is getting ready to dump Ahmadinejad. At best, another reformer similar to Khatami will take his place. More likely, it'll be a traditional Islamic conservative.
At very best, Iran in 2007 will be a bit like it was in 2002 when the sabre rattling started. And Iran's Supreme Leader, who has a lot more power than the President, has been the same all the way through. Only by deliberately selecting evidence to fit your theory could you argue that Bush's actions have been successful. If Bush had agreed to the proposed dialogue with Khatami back in 2003, then things might have been different.
(On a slight tangent, Ahmadinejad's rise and fall are both partly explained by domestic Iranian issues, particularly the economy. It is amusing to see the way this is played up and/or down to fit the theory. Support for Ahmadinejad in 2005 was caused by domestic issues, not the hostile posture of the U.S. government. Waning support in 2007 is caused by that same hostility, not his failure to deliver on the promises he made on domestic issues. Hmm, a model of consistency there... In reality, there's a bit of both in both.)
On the other side, those arguing that Ahmadinejad is just misunderstood are mistaken. Leaving aside the recent barrage of anti-Iran propaganda (*waves at Con Coughlin*) Ahmadinejad is still not one of the good guys. He's a liability to the Iranian people and most Iranians realise that. He's on his way out, a good thing for the people of Iran, unless Bush and co. launch a military attack and rally Iranians behind their President.
For anyone who doubts this would happen, look at Bush's popularity among Americans post-9/11. After the attacks, his approval ratings jumped by about 30%. People from all sides of the political spectrum were lining up to express their support for the President. A similar thing will happen if the U.S. takes military action against Iran.
But most Iranians do not share the views of their current President. The anti-Western sentiment caused by the CIA sponsored coup against Mossadegh in 1953 and the subsequent British and American support for the Shah is still strong but it does not have the resonance it once did. For most of Iran's relatively youthful population, the coup was a long time ago.
Now, as Iran's well educated young population looks to move their country forwards, Bush's hostility threatens to create a whole new wave of anti-American sentiment. Unsurprisingly, Bush and his advisers have learnt nothing from the years of self-serving Western support for the Shah and the enormous blowback which it caused.