Who would benefit from instability in Iran?

The only people to benefit is the local population. Not Saddam, or any other outside influence.

As with the 18th-century French monarchy, a state that was tyrannical at home promoted liberalism abroad as a weapon against a hated rival (then England, now Saddam).

In the case of 18th-century France, this intervention backfired; the principles they abetted abroad came back to haunt them.

Iran is having the same experience right now…

1. The explosives almost certainly came from Iraq. Hence, this action, though not necessarily positive from a standpoint of Iranian freedom, may prove positive from a standpoint of Iraqi non-interference. It is very difficult for Iran to maintain plausible deniability in their dealings with Iraqi infiltrators (see SCIRI and Sadr) if they treat the border as a selectively permeable membrane. If this makes them guard their border more carefully, it can only help Iraq.

2. This helps shatter the regime’s aura of invincibility. No doubt Iran tells its citizens to look westward for the consequences of a fallen Iranian clerisy. “After us, the deluge.” Well, perhaps an early appearance of the deluge will convince some fence-sitters that the Iranian police state isn’t quite the protection they’d been lead to believe.

3. Iran will need a scapegoat. And the most obvious scapegoat is the anti-government, pro-democracy advocates whom we are all hoping will tear down the walls separating Iran from the free world. This also means that Iran will probably use this bombing as an excuse for rounding up pro-democracy leadership.

Furthermore, they are already trying to turn this into a rallying point for patriotic Iranians. “Show these bombers that we will not be intimidated by turning out to the polls in force!” However, as Spain proved, a false claim with respect to the provenance of the attack may prove harmful to the ruling party in a way that the truth could have mitigated. That is, if Iran chooses unwisely and tries to pin this crime on uninvolved parties, then the truth comes out prior to the election, it could be a rallying point against the government, as coverups often become.

One way or another, I think this bombing may prove a catalyst for change. I just hope the change is toward freer days for Iranians.

There is a very good article by Regime Change Iran. H/t to Chrenkoff.