A very interesting essay discusses the history of science (and education) in the Arab world may be found at: http://www.sciencemag.org/cgi/content/full/308/5727/1416
Great article, Ian. That loss of identity afflicts not only to Arabs but to many minorities around the world. Nevertheless I think the solution is way more complex than what the author suggests.
Clearly, what needs to be done is to put together a coalition of Western-educated Muslims, including some from those Muslim countries with some semblance of democratic institutions, and have them return to their home countries and press for state support of scientific research. Or maybe some scientifically-inclined Muslims might strike entrepreneurial riches either here or at home and privately endow scientific research.