Juan Cole has a translation of Supreme Leader Ali Khamenei's response to Barack Obama's Nowruz message, along with some preliminary analysis. He says the US media got it wrong by calling it a "rebuff," and in fact Khamenei prefers to wait and see if the actions match the words.
Please pay attention. If you go on with the slogan of discussion and pressure, saying that you will negotiate with Iran, and at the same time impose pressure, threats, and changes, then our nation will not like such words. We do not have any experience with the new US President and Government. We shall see and judge. You change, and we shall change as well. If you do not change, our people became more and more experienced, stronger, and more patient in the past 30 years.
The fact that Khamenei took the overture seriously, and has laid out in this speech a kind of first position for bargaining, means that the Nowruz message had its desired effect. This is a starting point for negotiations to begin.
Daniel Brumberg has some additional good thoughts. The Middle East is a puzzle, and attaching a piece to the picture can also alienate the other pieces, to belabor the metaphor. There are countries in the region that would rather not see US-Iranian engagement. And Iran would rather not see, for example, US-Syrian engagement. Distrust and suspicion rules the day, and it has been borne across decades. Nothing will come easy. But at least this represents a negotiating track rather than a military one.
...the leader of Hamas also welcomes the President's "new language." While complex, the opportunity for real substantive change in the Middle East exists.