Mmm, I always thought the economic relationship between the Middle East and the western world to be the source of conflict renewal between them. As long as the economic relationship exists, it's difficult for either side to disengage.
It's like a bad marriage, but you still have to live in the same house.
In this particular case, there is no cold-war policy that can be adopted to isolate the Middle East, rather there is only a conflicted engagement over resources.
The kind of war being fought in the middle east is prohibitively expensive and it is also no longer morally supported in the US. I think as long as our dependency on oil is reduced in the coming generations, the problem will solve themselves. It's likely civil conflict will occur in the middle east without western money and funding simply because of the atrocious management of the governments. However, these corrupt reigmes are being funded by the western world's demand for oil.
As far as the Mosque, if it's legal, I don't think there is anything should be done about it. It certainly is contentious and I think it's a sensitive issue, I think the people building the Mosque probably aren't that fond of America and the people who don't want to the Mosque have no real reason to like Muslims, but it's a conflict both sides seem willing to engage in.
As far as Jimbean's comment, it's meaningless, America operate under the rule of law and as long as they stay within the rule of law, they have the freedom to build the mosque. It's pointless to speculate on the reasons, you can protest, picket, try to keep people from entering the mosque.
See segregation for example.
Look at all the nice people. Don't they seem so friendly in the sunday best.
America isn't a utilitarian society, because it views the protection of some freedom and diversity as being a higher priority then more measurable utility, and this is why we get to own guns, have religious freedom, thump our noses at authority, piss people off with words/mosques/varying level of offensive behavior, and many others protections to non-utilitarian principles.