I'm watching an excellent Frontline special on Iran right now. Frontline interviewed many experts and key people, including Vali Nasr. The reformists in Iran, led by Mohammed Khatami, wanted to normalize relations with the US. Dubya basically gave Khatami and the reformists the cold shoulder and rejected a key peace offer in 2005. Washington apparently saw the reformists as politically weak and unable to deliver. This may have been Bush's biggest blunder in American relations with Iran.
Watch the full program here.