Israel is not a state like most others in the world. It was state founded by immigrants against the wishes of the native people of the land. On top of this, it was not founded for the for the people who live within its geographic borders like most states. It was instead designed to be a state for all of the Jewish people, a people who had been scattered all over the world for centuries. For this state to be established it was neccesary to displace hundreds of thousands of the native populace.
When Ahmadinejad talks of wiping Israel off the map he is essentially saying two things. Firstly that all of the people who were displaced by Israel's creation should be allowed to return to their homes, Secondly, that the idea of partitioning Palestine should be scrapped and that instead all of the people in the holy land should live together as equals, in one state. Under this arrangement all of the Jews who live in the region would be free to remain there and be guaranteed protection. Jews born in New York and Moscow however, would not automatically qualify for citizenship, they would however be welcome to undergo standard immigration procedures. This would end the "Jewish character" of Israel and so signal the end of a Zionist state. When Ahmadinejad talks of Israel he normally uses the phrase "Zionist entity", in order to delegitimise it. The arrangements which I have described and Ahmadinjad has called for would destroy the Zionist entity in the Middle East.
To add further context, the now infamous quote about Israel being "wiped off the map" came during a discussion of something Khomeini said many years earlier. Khomeini also viewed Israel as an illegitmate state and he would not allow Iran to have any formal relations with it(although they had some very significant informal relations!). There was another state in the world Khomeini viewed as illegitimate and refused relation with, that state was apartheid South Africa. Khomeini also called for the end of the oppressive white government, he did not however call for the "extermination" of all white South Africans, instead he said Whites, Blacks and others should live peacefully with each other as equals in one state. Ahmadinejad is calling for the same with Israel, except replace Whites and Blacks with Jews, Muslims and Christians.
A western style democracy is not practical for Iran; it would be contrary to the political views of so many in the country as to be paradoxical. It would also be open to exploitation by foreign powers. What you do have in Iran is active political participation from a large portion of the populace, many of whom disagree over important issues. It should be noted that since 1979 there has been tremendous change in the country, this change occurred in the framework of the current political system. Iran has became more liberal over the years and given the average age of Iran's population, this is something I think will continue in the future. It will however retain its Islamic characeter for the forseeable future, this is down to the role Islam plays in Iran's society as opposed to a few evil, oppresive mullahs. The barrier to this liberalisation, which hopefully will see Iran begin to resemble "western" states in many ways, is undoubtedly foreign interference, something which gives hardliners and skeptics opportunities to denounce liberalisers for placing the country in danger.
It's interesting to note that the most popular parties emerging in Iraq today, SIIC for example, are hugely influenced by the Iranian form of governance. Indeed within a decade I wouldn't be at all surprised to see that Iraq's form of government resembles Irans. This type of government would probably be better for the Middle East in the long run than the current strongmen and despots who controll most states in the Middle East.
If you want to learn about Iran I would suggest avoiding a disgraced, exiled Iranian neo-conservative who enjoyed life in Iran under the Shah!
