Now this is an interesting take on what Time Magazine things are 4 ways the crisis in Iran could be resolved.
1. Government Falls. They say this one is highly unlikely and I would tend to agree. Hundreds of thousands in the street will only succeed in toppling the government if the military switches sides. They might be able to battle the Republican Guard and the Basij militia who support Ahmadinejoke and the result will not be pretty. This would result in a civil war and no one in that region would want to see that.
2. Tehran Tiananmen-style Massacre: This would damage the government to the core and thus I think it will be unlikely as well. There is no way they could keep the massacre quiet and nations all over the world will be outraged. Iran will fritter away their legitimacy and standing in the world for what would end up as a short term solution. Obama or any other world leader would never sit down with Ahmadinejoke who will have gotten his job over a massive pile of Iranian corpses. This will also create an insurgency in Iran that will be in place for decades.
3. Re-Vote after Guardian Council Acknowledges Irregularities: This is the scenario that I would do if I was in Khamenei's shoes. This one allows him to save face and say we are deferring to the "wise" councilmen. Then have a run-off between Mousavi and Ahmadinejoke.
You would then have a chance to rig an Ahmadinejoke win but without the vote so fake. Or you could could just let whatever true result of the election stand. Then you simply block anything that Mousavi does that you don't agree with. The whole time you will work to drive a wedge between the pragmatists and the reformers. This is the divide and conquer method but you get to placate the people and look like the "voice of reason."
4. Power Sharing: Time says this will only happen if Mousavi backs down or feels threatened enough to back down. This will allow Khamenei to have his boy, Ahamdinejoke in power but have some kind of power sharing arrangement with pragmatists and reformers mixed in with hard liners.
If I was Khamenei I would not make this bargain because this will put the pragmatists and reformers into one coalition against the hard liners. You are counting on disunity in order to rule and that just seems too unpredictable to me. This is especially bad because this coalition will have the power of the mob behind them and thus may be emboldened to play out a strong hand. Plus any failures will end up pinned on you and your boy, Ahamadinejoke instead of on Mousavi.
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