The goal of political Islam is to stress its own claim to authenticity and power by harking back to the Eighth Century, and to insist that Muslims today must look to this historical age for guidance in the Twenty-First Century.
Those Arab intellectuals who are trying to reconcile liberal democracy with political Islam are playing with fire.
That's too bad because modern Western democracy - American democratic values, anyway - seems to have its roots in the democratic nature of religious Calvinism, a creed as stern in its time as Wahhabi Islam is today. Playing with fire? Such "fire" was Western Democracy's ally!
How did this come about? Three reasons:
1) The Calvinists and their offshoots (including the Puritans of the Mayflower) elected their own religious leaders and police, so it was only a small jump from there to electing their own government.
2) The Calvinist belief in divine predestination meant that you couldn't blame the evil plottings of others for your lot in life; it was up to you to make the best of it.
3) The Calvinist ethics of hard work, discipline, and education served to create a society that created its own wealth and slowly relaxed its intrusions into personal life as the community realized such strictures were no longer necessary but more of a hindrance to the smooth functioning of the community.
Eventually, religious freedom was seen as a value in its own right, and to exercise religious freedom - especially the freedom to CHANGE religions - personal freedom is required.
The implication is clear: as long as the Arab World restricts religious freedom, it cannot become democratic in the Western sense any time soon. Nevertheless, why can't Muslims demand that democratic accountability in their local communities and places of worship begin immediately?
Update 4/12/07: I'm not sure this "Calvinist evolution" is a complete enough answer and invite comments from my readers.