> I think "Iran was considering a peace deal" is a bit of a stretch here.
Iran was considering a peace deal. I agree that the most plausible was they would reject it.
> What does Iran still have to lose? Well, a lot.
The US could do this, sure, but then Iran would have even less to lose. This might work if the US started small and threatened escalation to try to compel Iran, but the US started at massive escalation so any additional airstrikes are likely to be less escalatory and thus less of a threat.
Even worse, there is a fundamental problem with madman theory, if Iran believes they are dealing with a madman, then threats aren't effective because a mad man doesn't keep promises. If you think your opponent is not rational, then you should not expect them to follow cause and effect.
> Iran is never going to capitulate, until it capitulates. Their rhetoric is going to remain that the US has no more levers and can't change anything, because admitting otherwise invites those levers to be engaged.
I agree that we don't know exactly how much pressure is on Iran. Iran historically has been willing to suffer almost any cost. During the Iran Iraq war then sent enormous numbers of teenagers in human wave attacks over and over. It is my estimation that the current war with the US has helped to stabilize the Iranian government and that they benefit more from the war continuing than from a peace deal.
The only military lever the US has left on the table is an invasion of Iran. Maybe limited to the coastline or maybe complete regime change. Trump has not even attempted to bluff that he is doing this.
The Iran/Iraq war is why I made the edit about US vs. Iraq. Just because Iran and Iraq fought for years does not mean Iran or Iraq are able to fight a super power. They can not.
Iran does not think they are dealing with a madman. I don't believe for a second that they think that if all the demands made of them are met someone will harm them just for the fun of it. The maximalists demands. The problem is those maximalists demands run against everything this regime stands for. Not that those demands are bad for the Iranian people, they're actually good. What is true (and it's not a question of madman theory) is that the US and Israel will absolutely take some concessions and be willing to delay dealing with the rest of the problems. That is not irrational. That is 100% rational. And ofcourse the Iranians knows this as well. What the US and Israel want is a stop to the proxy wars, a stop to long range missiles, a stop to the nuclear program and a stop to "exporting the revolution". No workarounds or funny business.
I think the regime is very weak. Conditions in Iran are worse and a population that already wanted them gone now wants them even more gone. Their boisterous rhetoric is a sign of weakness that westerners misinterpret. The more they sound threatening and winning the more they are losing.