Mahmoud Ahmadinejad's disputed election win has frustrated reform-minded Iranians and dismayed outsiders who had hoped Iran might "unclench its fist" under a new leader and engage with US President Barack Obama.
Israelis may see a silver lining in the result of Friday's presidential vote: Ahmadinejad's fiery rhetoric is their best weapon in convincing the world to halt Iran's nuclear ambitions.
But the Iranians who voted for moderate candidate Mirhossein Mousavi feel betrayed by what they see as the blatant rigging of a poll that has denied them even the limited choice on offer under the Islamic Republic's complex system of clerical rule.
"No one even imagined this much vote rigging, before the eyes of the world, by a government which says it is committed to religious justice," Mr Mousavi complained. "[This] will jeopardise the pillars of the Islamic Republic and establish tyranny".
Supreme Leader Ayatollah Ali Khamenei endorsed the result and told all Iranians to avoid "provocative behaviour" and rally behind Mr Ahmadinejad, who called the election "free and healthy".
The authorities have shown a firm hand against dissent since official results on Sunday gave Mr Ahmadinejad nearly 63 per cent of the vote and only 34 per cent for Mr Mousavi, belying the enthusiasm he had fired up among reformers and moderate conservatives.
Security forces did not fire on the thousands of pro-Mousavi protesters who took to the streets of Tehran on Saturday, but the televised images of uniformed men on motorcycles flailing their batons sent a clear signal, at least to the outside world.
The anti-Ahmadinejad camp was "taken by surprise and is scrambling for a plan", according to Trita Parsi, director of the Washington-based National Iranian American Council.
"Increasingly, given their failure to get Mr Khamenei to intervene, their only option seems to be to directly challenge - or threaten to challenge - the supreme leader," he wrote.
Whether any such challenge using existing institutions can be mounted with any realistic chance of success is not clear.
"Although the President is not the chief decision-maker, Mr Ahmadinejad's win is a sign that Iranian politics is in a state of flux," said Alireza Nader of the RAND Corporation.
"The power of the traditional ruling elite - men such as (Hashemi Akbar) Rafsanjani - has been effectively challenged by Mr Ahmadinejad and his supporters, including top-ranking and fundamentalist members of the Revolutionary Guard."
In a TV debate before the vote, Mr Ahmadinejad accused the former President and his sons of corruption, prompting an angry letter from Mr Rafsanjani to Mr Khamenei demanding his intervention.
"It all depends now on what the opposition do. The gauntlet has been thrown down," said Ali Ansari, director of the Institute for Iranian Studies at St Andrews University. They [the authorities] have claimed victory. They are going to calculate that everyone is so stunned and shocked that they will go home bewildered."
Whatever the outcome of the power struggle within Iran's upper echelons, the world now faces a dilemma - continue to deal with Mr Ahmadinejad and thereby give him legitimacy, or shun him and perhaps forfeit any slim remaining chance for dialogue?
"Conceivably, with this victory under his belt, Mr Ahmadinejad could attempt a Nixon-in-China gambit of trying to be the conservative that patches up relations with the hitherto hated superpower," said Mark Fitzpatrick, senior fellow for non-proliferation at London's International Institute for Strategic Studies. "But I don't have great optimism for that."
Mr Nader, the RAND analyst, said Mr Ahmadinejad's win would make US engagement harder and might bring "continued social and political repression, economic mismanagement and more assertive foreign policies, especially on the nuclear programme".
Mr Khamenei, not the president, ultimately handles decisions on nuclear and foreign Policy, but Mr Ahmadinejad has exerted his own influence with derisive attacks on the US and Israel.
Mr Obama, who has offered direct talks with Iran, has said he wants to know by the end of this year whether Tehran is ready for a meaningful dialogue on the nuclear and other issues.
Mr Parsi said the vote-rigging row complicated President Obama's strategy and any internal struggle could delay decision-making in Iran.
"The White House's posture thus far is a constructive one - while it cannot remain indifferent to irregularities in the elections, it must be careful never to get ahead of the Iranian people and the anti-Ahmadinejad candidates," he said.
If Obama's outreach fails, the US and its allies may find few options other than further sanctions against Iran, which denies their charges that it is seeking nuclear weapons.
"The sanctions have been dusted off and ready to roll out, but certainly not yet. Mr Obama has said let's give engagement a chance," said Mr Fitzpatrick, at the IISS.
Mr Ahmadinejad's re-election, he argued, would comfort many Israelis who have long urged international action against Iran.
"They had been worried that a more friendly face of Iran would lull the world into believing that a solution was around the corner. So there will certainly be some in Israel who are happy that there will not be such misperceptions."
But Mr Fitzpatrick discounted any prospect of an Israeli military strike on Iran's nuclear sites in the next few months. "Really the Obama outreach strategy has to be given at least some time to see if there is any chance," he declared.