According to Reuters, Bush has authorized the killing or capturing of Iranians in Iraq. This goes for intelligence agents or members of the Revolutionary Guard, but not, apparently, for diplomats or civilians.
First of all, this seems like an obvious escalation in the conflict between Iran and the US, and I think if something comes of it, then Washington will see that Tehran can be very, very nasty: look for the capture of American contractors or soldiers as a reaction. Furthermore, the problem with the distinction between civilians/diplomats and intelligence/revolutionary guards is that it is standard practice for countries to give intelligence officers diplomatic or civilian cover. For example, many CIA operations are run from American embassies abroad.
Mark my words: The first Iranian that gets killed in Iraq will mean bad news for everyone. I can’t help but wonder if this is not just a tactic by the Bush administration to goad Tehran into doing something that will give the US an “excuse” to bomb Iranian nuclear plants.