some points - I knew a few Iranians when I lived in Tokyo a number of years ago as well as some here in Canada. The one thing they all pretty much stated was that the young people of Iran represented a real threat to the ruling theocracy. Ie. They would go surreptitiously go on dates (pretending they were brother and sister) or have drinking parties in the country (hide the alcohol in orange juice etc) they were taking risks, but the point is that the population of Iran is quite different from the young revolutionaries when the Shah was overthrown 25 years ago. Iran is still a dictatorship, but are the Mullah

Teribus, I wouldnt be so cocky about US military capability,
currently they dont have any response to the Russian SHKVAL torpedo, a
supercavitating torpedo which can go 230mph underwater by creating a gas bubble in front of it. (a malfunction in one of these reportedly brought down the Kursk)

not that Iran necessarily has one, but a Canadian agent was able to secure one for the West a few years ago (much to Putins Chagrin)

as far as the the US navy's ability to detect intrusions, wasnt there an Iraqi fishing boat that collided with a carrier a couple of years ago. Seems a bit too close to me.

as far as Chinas willingness to dump US treasury bills, a drop in the value of the US dollar would hurt CHina as well since their currency is still pegged to it. On the other hand many nations are quietly moving their savings out of US funds, since they are apprehensive about the deepest deficit of any country in history. And it's beginning to appear that the reason that Bush and his advisors say that deficits dont matter anymore is because they can devalue the dollar as he did in 04' and Nixon did in 71 and pass on the cost to the rest of the world.

see here coming war with iran
I should say that a bit of this article is over the top, with the current international mood on Iran its unlikely we will switch trading oil from US dollars to Euros, but there are some valid points about
the power of the US dollar, it was not that long ago that Pounds sterling were the International currency of choice.