Someone there could run local relay and stream to/from Tor .onion relay.

https://relayable.org/strfry-relay-howto.html

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They do, but the can't cover the expenses for large scale trafic.

Should not require a larger instance to run a relay. Perhaps equivalent of 65,000 Sats a month. Does it need to be in Iran or can be in Bahrain or somewhere near to not be blocked?

Im not sure, some people from a groupe that are related to nostr:npub1fdzjam465k7660kakczdm7xujwk7tzse2w8xq3c2yyhdqp42zjaqc0l9xg run relays and vpn and so.

Idk much about the tech parts.