That is a terrible thing to say, isn't it? That 'the only good Muslim is a dead Muslim' thing. I'm a Christian, and would never, ever dream of saying anything like that.
I've come to the opinon that everyone in the world, including Christians (and definately including myself) has a problem with 'pre-judgement'. It's a serious issue. And it leads to statements like the one Hunter kindly pointed out.
I had a real problem dealing with Muslim people (in fact, people of Arab origin) after the London bombings in July 2005. I was quite suspicious of Arab people simply because the news and media kept repeating to me that Muslim extremists had done damage to 'my country'. Which, of course, eventually started to get old. But the fear it instilled in me wouldn't budge. If I was on a bus and saw somebody get on who looked like a particularly devout Muslim, I was slightly unnerved, and attempted to keep my eye on them.
And I knew what I was doing wasn't right. It's ridiculous to make such a huge assumption, to automatically think that every Muslim is a bomber. So, I decided to try and challenge myself to break this assumptive habit. I went to Jordan over the summer, and taught in some of the school lessons. And I learned that Arab people are some of the most welcoming, friendly, and wonderful people I could ever hope to meet! I mixed with both Christian and Muslim Arabs and they made me feel so welcome and happy! I would LOVE to go back there!
Moreover, I realised how strange it can feel to be the person with 'different skin colour'. I was no longer in the majority. I was the pale white chick, in a world of people who were looking, from my perspective, healthy and tanned ^_^ It helped me to understand how intimidating it can be if people of the 'dominating country skin-colour' (i.e.... white in England, middle-eastern in Jordan etc) stare at you for being different, and so I try not to do that now I'm back in the land of the pasty and pale :P
It was an enlightening experience. Xenophobia is a scary thing. But it is something that can be overcome.
And so I believe the same thing can happen with different religions. I'm a Christian, so I do fundamentally believe my religion is right and others are wrong (just as a Jewish person would believe mine was wrong, or a follower of Islam would believe I am wrong. There's nothing wrong with me stating that). However, I believe the 'religion' is wrong, not the person

People who love Jesus love everybody (or they SHOULD do at least, lol) and so should never condemn a person for their religion (saying the only good Muslim is a dead Muslim for example). Tolerance is very important. As is loving each other (or at least... not trying to KILL each other, lol). Let's all just get along, ne?
