He is not proposing that we imposed western style government or culture.

What he is saying is that many of the existing governments are appeasing the extremist groups to divert attention from their own corruption and decadent lifestyle. (ie. If thet are hating the USA they won't focus on me.)

The plan that he proposes is to exert our considerable influence on the various governments to stop the appeasement and promote the moderate Islamic intellectuals like the guy Matt described.

Musharraf's action to place extremist clerics under house arrest and replace military officers sympathetic to the Taliban is an example of the reform he is has in mind.