A recent article on "First Things" presents a The Islamic Case for Religious Liberty. Essentially, it argues that the extant evidence for religious oppression in Islam is far outweighed by the evidence for religious liberty, which embodies the true Spirit of the Qur'an and Muhammad's teachings. Abdullah Saeed says:
The words of the Qur’an and hadith contain rich resources for supporting the democratic order. If Muslims are to embrace modernity, including life in a pluralistic, democratic society, without abandoning their faith, they must take up the argument for religious liberty that is embedded in their history and that stands at the center of their most sacred texts.
Although the broad thrust of the Qur’an and hadith supports religious liberty, many parts of these texts can be, and traditionally have been, interpreted as denying it. One example is a qur’anic verse that deals with the question of the jizyah, a tax on non-Muslims: “Fight those who believe not in Allah nor the Last Day, nor hold that forbidden which hath been forbidden by Allah and His Messenger, nor acknowledge the religion of Truth, (even if they are) of the People of the Book, until they pay the Jizyah with willing submission, and feel themselves subdued” (Q 9:29). The Prophet reportedly sometimes demands the death penalty for apostasy, the most obvious example of this being the hadith “Whoever changes his religion, kill him” (Bukhari, Sahih, 9, 84, hadith 57).
These problematic texts are outweighed by the bulk of the texts and instruction provided by the two most important authorities in Islam, the Qur’an and the Prophet Muhammad’s actual practice. Both are remarkably supportive of the idea of individual and personal religious freedom.
The bedrock of the Islamic case for religious liberty is the Qur’an’s vision of the human person. The Qur’an’s anthropology—which is shared by Christianity and Judaism—views every human being as a creation of God, blessed with intellect and free will. God created humans “in the best of molds” (Q 95:4) and in doing so honored humanity and conferred on it special favors (Q 17:70). The Qur’an emphasizes that human beings have inherent worth and dignity. Further, it holds that God gave humankind the intellect and ability to discern between right and wrong (Q 17:15 and 6:104).
The Qur’an emphasizes free choice. “The truth [has now come] from your Sustainer: Let, then, him who wills, believe in it, and let him who wills, reject it,” it says (Q 18:29). And also: “Whoever chooses to follow the right path follows it but for his own good; and whoever goes astray goes but astray to his own hurt” (Q 17:15). Resoundingly, the Qur’an declares that “there shall be no coercion in matters of faith” (Q 2:256). Belief is an individual choice—or, rather, it is a choice involving the individual and God. Therefore forced conversions are simply unacceptable, and anyone who would use force rather than persuasion to promote religion must ignore the view of the person central to the Qur’an.
The capstone of the qur’anic case for religious liberty is the fact that not even the Prophet Muhammad could impose or force people to profess Islam. When people were unreceptive to the message of Islam, the Qur’an explicitly reminded him that he was never to resort to coercion: “Your task is only to exhort; you cannot compel them [to believe]” (Q 88:21)...
Saeed is fundamentally mistaken. He says "If Muslims are to embrace modernity, including life in a pluralistic, democratic society, without abandoning their faith, they must take up the argument for religious liberty that is embedded in their history and that stands at the center of their most sacred texts."
The problem with this position is, of course, that religious liberty does not stand embedded in Islamic history and Islamic texts. To argue that it does requires the abandonment of Islamic tradition (ahadith), the Islamic hermeneutic (learning what Muhammad and the Qur'an teach through the ahadith, and employing the law of abrogation), and the Islamic system of interpretation (ijtihad).
For example, the ahadith that state the apostate should be killed are not just found in a few small places (as Saeed has presented it) but rather permeate every level of the hadith. All books of Sahih Sitah contain the law of apostasy, and many, many times over. It is so prevalent, in fact, that all four major schools of Sunni thought are in agreement with the law of apostasy, and all three Shi'i schools are in agreement. Perhaps an article by Maududi would be enlightening here: read Maududi's The Punishment of the Apostate According to Islamic Law. Pay special attention to his sources, and compare them to Saeed's.
Indeed, what bothered me the most about Saeed's article is his deceptive use of Bukhari 9.92.424. He said: "A hadith in Bukhari’s collection... tells of a man who came to Medina and converted to Islam. Shortly after his arrival, however, he informed Prophet Muhammad that he wanted to return to his former religion. Far from punishing him with death, the Prophet let him go free, without imposing any penalty at all."
Now read the hadith for yourself:
"A bedouin gave the Pledge of allegiance for embracing Islam to Allah's Apostle, and then he got an attack of fever in Medina and came to Allah's Apostle: and said, "O Allah's Apostle! Cancel my pledge." Allah's Apostle refused to do so. The bedouin came to him again and said, "Cancel my pledge," but he refused again, and then again, the bedouin came to him and said, "Cancel my pledge," and Allah's Apostle refused. The bedouin finally went away, and Allah's Apostle said, "Medina is like a pair of bellows (furnace), it expels its impurities while it brightens and clears its good.'"
What Saeed neglected to mention was that the man was not killed because Muhammad denied him is liberty to leave Islam! The man wasn't allowed to even commit apostasy, that's why he wasn't killed! Far from proving his point, this hadith shows the lack of religious liberty allowed by Muhammad and Islam. That Saeed would use this hadith to argue for Islam's religious liberty shows that he is either incapable of objective thought or is deceiving his audience.
In short, if one wishes to argue for an Islam that is peaceful via its history and sacred texts, he would need to deny the Islamic history books and deny the traditional methods of ijtihad, including interpretation of the Qur'an. Certain sects of Muslims can do this by pointing to religious reformers or a non-existent hermeneutic framework (Ahmadis, Quranis, Sufis, etc.) but not the vast majority of Muslims (Sunnis and Shias).