Keep in mind that this Iranian goverment is a moderate goverment and not the Islamic government that we are familiar with. Iran and Israel have had a long relationship that goes back to the old Persian Empire days - its only recently that the "Death to Israel" relationship has occurred.
So given that kind of government you could have them there. However that doesnt mean that there arent people in Iran (Twilight 2000 version) from the old regime who are too happy about Israelis being there - could be an interesting way to make an Israeli player characters life a lot more interesting in Iran.
There might be an issue with his timeline there that you mentioned as to the Civgov break with MilGov
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