There is an idea popular with liberal Westerners regarding the potential of an Islamic Reformation. According to the all-seeing wiki, this Reformation would bring Islam up to speed with the rest of the world (or Europe) - Islam would become a liberal, modernist, humanist religion. The unofficial spokesman of this Reformation is Salman Rushdie, although several "Progressive Islam" movements are sometimes associated with the idea of reform within Islam.

I would say that this comparison to the Reformation is mis-applied. The Islamic Reformation is already underway, in the form of an IslamIST Reformation. While the analogy to the Protestant Reformation is of limited utility, since it is already in use it should at least be corrected.

The Islamists as Reformers

Driven, ambitious men of a religious bent are dissatisfied with the present state of their chosen religion. The see corruption in their temporal and spiritual leaders and indifference on the part of their co-religionists. They see the changes in theology from the founding of the religion to the present day, and mark these as unauthorized, un-Godly innovations. They urge a return to the sole legitimate religious Scripture. Religion should guide all aspects of personal and public life, in their view. To that end, they establish organizations, and issue proclamations of the characteristics of "true" religion. They are viewed by some as having no "authority" to issue such proclamations, but to their supporters, these statements are often viewed as law.

Who was just described? Martin Luther and John Calvin, or Hassan al-Banna and Sayyid Qutb?

The differences

1. There is no Catholic Church and single orthodoxy to reform.
In the Islamist movement, it is the temporal leaders and outside forces who are primarily to blame for the current state of the religion, rather than the religious leaders. These Islamic religious leaders, the scholars of law and theology, are not held as the answer, however. To the Islamists, in general, the state should remain the dispenser of law, which it has become in the Sunni Islamic world in the past 100 years. The movement is thus a reform, not a return to the "classical" Islamic state. The state would remain, but with the Islamists in charge, using an Islamic worldview to dispense justice, with possible advising by the scholars. (See Noah Feldman, "The Fall and Rise of the Islamic State")

2. The direction of violence.
I would almost say that the Islamists have jumped the gun and declared jihad before their chickens were hatched, to keep mixing metaphors. Serious attempts were made at the internal reforms, in Egypt, Palestine, Algeria, Sudan, and Syria; these met with mixed success, mostly failures. Before these reforms took hold, however, branches of the Islamists declared a wider, global fight against their oppressors, the West. Now the very governments which the Islamists initially sought to reform have the world superpower allied against them. The chances for Islamists to take control of the government in Egypt, for example, are much lower now than 10 years ago.

3. Democracy.
This may be the Islamist's best chance, due in part to the Bush administration's hand-tying policies. The U.S. is not only protecting its interests and seeking retribution for the September 11 attacks, it is seeking to promote democracy worldwide. The problem here is that the power of the U.S. is so great, the corruption of governments in most Islamic countries so complete, that the most inspirational option available to the majority of Muslims is the Islamist movement. If the Islamists are able to be elected into office, the U.S. would be unable to deny their legitimacy.

So...Where to?

The Islamic Reformation, as listed by wikipedia, doesn't stand a chance. Liberal Muslims can, if they want, live in a secular, western society, taking refuge in multiculuralism and giving their Islamic roots a token nod. Simply put, there is no impetus to fight for a Reform.
The Islamists, the real Reformers, have that impetus. They live in majority Muslim countries, have deep and abiding faith and ties to their religion, and are pissed off. The character of their Reformation is different than the Protestant Reformation, but it may well change the world in an equally significant way.