Iran is now digesting the message of President Khatami's address. Many ordinary Iranians watched it illegally on CNN.

Others waited until it was re-broadcast by the local media. The address has aroused great interest in Iran, where many Iranians want to see an end to Iran's international isolation.

President Khatami broke several taboos. Although he said it was too early for Iran and the United States to meet government to government, he held out the hope of an eventual rapprochement if Washington changed what he described as its cold war mentality.

President Khatami said he regretted that the taking of hostages at the American embassy shortly after the Islamic Revolution of 1979 had hurt American feelings. He paid respect to American civilization, and said he was, personally, opposed to the burning of American flags.

President Khatami's words were chosen carefully but they could provoke opposition from powerful Iranian conservatives. They're now locked in confrontation with President Khatami and his new brand of openness and reform, and Iran's relationship with the United States has become part of this wider power struggle.

Although President Khatami has a massive popular mandate for change, his power is checked by that of the Supreme Leader, Ayatollah Khamenei, who has the final word on major matters of state, and who's opposed to any rapprochement with America. The consensus in Iran is that the President had gone as far as any Iranian official could without any major concessions from Washington, and that the ball is now in America's court.