That's quite possible.
> and he likely lacks the capacity to end it if he wanted to.
Nah, he could end it any time he wants. Iran will stop bombing its neighbors in a week or so, and things will more or less return to the pre-war status quo.
He chooses to not end it, because the one thing that he cannot stand is losing face.
If Israel is still bombing them? Certainly.
This will put incredible international pressure on Israel to stop. It's one thing when the US wrecks the world's economy, and it's hard to push back on. It's an entirely different thing when a country of 10 million people is wrecking the world's economy. International opinion has been turning against it for years, already.
I do think it's very unlikely to continue the war if the bombing stopped, and only the proxy war continued.
Now it's not very effective now, but if the US packs up and leaves they can keep doing it. "Trade in Yuan or we drone strike your ships" would lead to every company that operates there doing it provided it actually kept risk and insurance rates down.