The only thing worse than soft diplomacy against a hard opponent, are toothless threats. There is no threat of invasion of Iran, and to even hint at it makes the US look foolish, and endangers future threats. You can't say "I'll kick you ass if you don't..." and then not when the bluff is called. Because next time you say it, you'll have to because it won't be believed. I'm glad W hasn't made any threats against Iran, It's one of the few foreign policy decisions I agree with. That threat is gone, everyone knows it, time to move on.
Sanctions are a joke, they never, ever work. That just gives the dictator a target for the suffering of the people. The whole nation rallies against whomever is putting on the sanctions, not against the dictators. Sanctions are the policy of the weak willed. They appear tough, allow policy makers a press moment, and they can then move on, but they are completely useless.
As far as conservatives saying for years that the military was cut too deep, they must have been a minority in the GOP. Cheney pushed cuts under Sr, the GOP controlled congress sure didn't do much to stave off cuts, and Rumsfeld always pushed for less. As I recall, the GOP was claiming credit for the 90's boom as the "Peace Dividend." But beyond that, with 150k troops in Iraq, how many more would we need to invade and hold Iran? Your probably getting close to half-million troops total for both states. At that point your talking about major war footing, and that's not the result of cuts that are too deep.
Also, you have to get over the "liberal" stereotype. Kennedy and Johnson had the Vietnam war, Clinton sent troops across the globe (and got bashed by the GOP for doing so) and bombed the Al Queda "pharmacy" and got hammered by the conservatives. Even Carter tried a military rescue of the hostages. Reagan negotiated their release, then dealt arms to Iran. Reagan pulled out of Beirut when the embassy was bombed. Reagan invaded Grenada. Bush Sr. invaded Iraq and more power to him for that. W. invaded Iraq again, and more power to him for that. But recall he said leading up to his first term he was against "nation building" because that's how the GOP bashed the Dems. For years the Dems took heat for using the military to "build" democracy abroad. The GOP preferred to work behind the scenes. Over the modern era its a mixed bag. At best its a mixed bag. But the GOP is late to this party. You can say "Hollywood Liberal," but modern liberals have a solid track record of defense.
The claim that the Middle East is a hotbed of terrorism because of the wide-spread oppression begs the question, "why isn't Sub-Sarahan Africa a hotbed, or Cuba, or China, or parts of Central and South America?" The Middle-East isn't a hotbed because of oppression, it's because they have the money. They have the money because we give it to them. It's like American gangs. They're dangerous because they have loads of drug cash. Take the cash away, and they get much less dangerous. Take the cash away, and they lose their lure to new recruits. We have to get away from oil to take the cash away from the terrorists. Take the cash away and we can formulate a plan based on want, not need. Nobody's freaking out about the atrocities and oppression in Africa because they use machetes, and they use machetes because they cannot afford the big stuff. Usually in a war you seek to decrease your opponents ability to wage that war. In the war on terrorism we're funding our opponents. Its just stupid.
On democracy, I can't think of a single instance where a nation build democracy without conquering the target nation. Recall MacAurthur was the defacto Emperor of Japan. Also, his rift with Truman came when Truman wouldn't give Mac the ok to conquer N. Korea. I hope it happens here, but I think its going to take decades, not years to get Iraq on stable footing and then get neighboring people to create their own. Remember that during this process all the dictators in the region will try to undermine Iraq, as a successful Iraq is a direct threat. You talk of sanctions, but the only sanction that matters is oil. It's not like boycotting pistacio's will bring any nation in the Middle East to its knees. The only way to realistically sanction Iran, Saudi Arabia, etc, is to sanction oil, but we can't do without oil. I think sanctions are a waste of time, but if you're going to do it, at least have some hope of success. Again, for me, this isn't environmental, its war. Get off oil, and they lose both their cash and their lever.
finally, Bush praises Musharraf. Got to love that. Pakistan is downgrading their efforts to contain and catch Bin Laden and Al Queda. Pakistan also gave nuke technology to N. Korea (who now flaunts it in the America's face, and exposes the limits of US power. Iran took note of this, and is now on the express train to the nuclear club. Hooray!) and possibly others, and the guy who did it is pardoned. Yet Bush is "very pleased" with Musharref. Incredible.