Iran have the capability to retaliate directly. They are within striking distance of any Israeli city.
Yes, but there isn't a dog's chance they will do that. If they did then the US would wipe out their military capability - exactly what Israel is hoping for. Same for the stories about blocking/mining the Straights.....doing so would result in the Iranian navy being wiped out in short order. Iran won't do a thing - they'll claim their nuclear installations survived (which they might well do) and that Israel's bombs just hit schools and orphanages. They know Israel wants them to retaliate, so that's exactly what they won't do.