Not sure how that determines "Literal arrogance...". My assumption, perhaps naive, is that Iran had connections to the outside world from which the hacking was taking place.

Are the Iranian hackers not within Iran?

You can buy access to compromised computers anywhere in the world. This would require cutting off any path to anywhere in the world, since the person performing the attacks can also be anywhere in the world.

The US isolating itself from the rest of the world isn't financially feasible.