As Christians wee have essentially two options before us with respect to Islam. The first is to say that Islam is essentially a stable religion and that it has been thwarted by Islamic "fascists," "extremists," or "fundamentalists." The second option is to decry Islam as violent by nature and incompatible with peaceful civilization and democracy.
Ever since 9/11, we've been hearing the former - that Islam is a "peaceful religion" that has an angry minority has corrupted for political purposes. But lately, I have been hearing people say that it is Islam itself. Evangelicals tend to the view that Islam is "Satanic" and "antichrist."
I for one believe that Muslims worship the one true God, but worship Him falsely. "Allah" is merely the Arabic word for God and Arab Christians use that word for our Lord in the their prayers. Hillaire Belloc catalogued Islam as a Christian heresy and not as a distinct world religion. After all, Muslims believe that Jesus was born of a virgin, that Mary was immaculate and sinless, that Jesus is the Messiah, that Christ ascended into Heaven and they he shall judge the living and the dead at the end of time. As pointed out recently by Abdallah Schleifer, Muslims have a higher Christology that the majority of clergy in the Church of England!
I'm still undecided. I have certainly met very lovely Muslim people who lived charitably and respected me as a Christian. But I still wonder, are they the norm or the exception? I've also been to Indonesia and seen men raising money for "jihad" against the neighboring Lutheran Christians. And the television has not lately improved my perception of global Islam.
I think the primary problem is that Islam has no magisterium. It is therefore impossible to talk about "what Islam is." And thus I suppose it comes to a case by case situation. It's like Protestantism, such an entity does not really exist except on paper. Their are Lutherans and Presbyterians and Episcopalians and Methodists and Baptists and Congregationalists. And even these have subsets.
I suppose the "two options" don't really exist either, because "Islam" doesn't exist. One cannot make a judgment either way on "Islam" because it does not exist in the way that American or the Catholic Church exists as an entity.