With the escalation in violence, Iran appears to have moved into its Tiananmen moment, the time when the regime brings much more deadly force to bear against popular mobilization. But events in Iran have moved away from the China comparison.
The key distinction between China in 1989 and Iran in 2009 is the strength of elite-level factionalism in the latter. In China, Zhao Ziyang and some close lieutenants pushed back against hard liners and tried to prevent martial law and the violence that ultimately erupted. But Zhao did not fully reveal his opposition until very late in the game, most famously when he went to Tiananmen Square on the night of May 19th, when martial law was announced, and said to the students that he was too late. He was essentially defeated then, and the elite-level split was resolved in favor of the hard-liners.
Iran looks much different at this moment. Mousavi is still issuing defiant statements (even though some reports suggest he is under house arrest). More importantly, the elite opposition appears to run much deeper: Rafsanjani is said to be working hard behind the scenes to thwart Khamenei and Ahmadinejad. Ahmadinejad has his own sources of power, so it is not clear who will prevail in this showdown, but the sides are more evenly matched than was the case in China in 1989. Much will depend on the military: if it stays strong behind the President and the Supreme Leader, the reformists could be thwarted. But if the military splits, with some moving in the direction of Rafsanjani, then some more significant political change could come down.
In short, while on the street level Iran now looks like something less than the massive mobilization of China 1989, at the elite level it appears to be something considerably more.