I think Bush knows full well what Islam is. Personally, I believe that there are two things at work here: (i) he's giving them a last chance to shape up; or (ii) he's stalling for time while we get ourselves ready for the inevitable.
I pray (fervently) that you are correct. But I am surprised that he hasn't formed a committee of moderate American muslims to lead the way. To put American fears to rest. To tell us that these fiends who kill innocents will be spurned (and indeed...are spurned).
But that hasn't happened. We just get the same tired language about the "religion of peace." I wonder if he isn't blinded by his friendships with the Saudis (he grew up in that environment)...doesn't he know about Wahhabism?
Also, I worry that the Prez thinks islam is a problem which can be solved only with military force. It is an ideo/religious problem...you can't shoot that.