while he probably just intended it to be a provocative remark, i think the u.s. should accept ahmadinejad's offer and let him observe the 2008 presidential election. first, it would be educational. he'd learn about the twenty-second amendment. it's not really our best amendment, it's not even close. but it does exist, and learning is always good for its own sake.
but on top of that, it would just be amusing if the u.s. said "yes." ahmadinejad probably doesn't think this country will. i think he's assuming the offer will be declined or ignored, thus giving him another thing to complain about. it would be funny to call his bluff and show a little hospitality when he's expecting a snub.