Remember this question? It came up quite a bit not long after 9/11, but well before the U.S. invasion of Iraq. Islam goes against human nature in many ways. The rules limit the individual from pursuit of interests that most likely will be in his/her favor, as well as society in general. Strict rules of behavior limit much opportunity. Islam can be considered a closed system, economically as well as socially. The frustration of being raised and living with such limited options would lead to friction with just about any and all groups (Internal as well as external) and at every level. In this way, capitalism and democracy is quite the opposite. This open approach is repulsive to them. For many of those who move into an open system, it would appear to be anarchy. Because they are used to such limited options and so many rules, having so many options and so few limits would appear to them as if nobody is obeying ANY rules, anywhere, anytime.
This must be one of the basic reasons that we are hated so much. They hate us for what we are. It is a mistake to misinterpret this as being hateful for what we do. This problem has been around for a very long time, long before even Israel became established. Historical pattern indicates that changing this will trigger organized warfare. Even if successfully changed, this problem can easily be seen as being around for many additional generations, possibly centuries.