As Lenin, Trotsky & Lukacs all agreed, the armed forces are crucial in any revolution. Against a cohesive, well-led and opposing army, no revolution can prevail. The people are either unarmed or poorly armed, and thus easily outgunned if they do not win the army. This is why it is so crucial that the protesters consciously sought to win over the soldiers, and that the troops, far from turning their guns on the demonstrators, have joined in celebrations with them, allowing them to paint anti-Mubarak graffiti on the tanks, sometimes even protecting them from police violence. The latest news is that the army has arrested two leading NDP figures, including a well-known thug by the name of Ahmad Ezz, and the Interior Minister Habib Al Adly. This looks like an attempt to punish the government for its violence against the protesters, but so far there has been no move against Mubarak. The army command is still presumably banking on gradual transference of power within the regime, perhaps to the intelligence chief Omar Suleiman. Stratfor's analysis suggests that army chiefs are basically managing the situation behind the scenes according to directions from the US State Department. This would explain why they're limiting potentially damaging and counter-productive violence against protesters, but also insulating Mubarak for the time being. Such would seem to be supported by some of the army's moves, such as despatching troops to guard the Rafah crossing and prevent any spread of this insurgent spirit into Gaza. If this is the case, then any political advances will be limited without a split in the army between the commanding officers and the lower ranks. It's clear that the protesters aren't going to just give up, and the refusal of the army to simply butcher hundreds of people means that they will continue to have an effect. Apart from the protests, tens of thousands of workers are effectively on strike, hurting ruling class interests and potentially compelling them to yield some concessions. But whether this becomes more than a managed transition to a slightly more benign regime will depend on just how cohesive the army is.
Update: Al Jazeera reports that leading officers have received orders to use live rounds on protesters yesterday. They have not done so yet, but are now threatening to come down hard on protesters who defy the curfew. The military top brass may have reached a deal with Mubarak. The protesters aren't going anywhere, so the question now is whether soldiers will disobey their orders.
Further Update: Tahrir Square is filled with protesters, and air jets are flying low over the square, buzzing the demonstrators in a very threatening way. Live footage shows the square thronging with noise, chants demanding the end of the regime, interrupted by the searing sounds of fighter jets flying overhead. There are also rumours that the army is about to announce Mubarak's departure, but scepticism would seem to be indicated here.