How? Why is this ridiculous generalization taken as axiomatic? A modernized Islam would not benefit America nearly as much as an exterminated Islam. Furthermore, recognizing barbarian holidays doesn't do a thing toward modernizing anything. It simply shows the savages that we're willing allies in our own defeat.
Religious Islam can be whatever it wants to be (without the holy war jihad, slavery, and honor killings). No tolerance needs to be shown POLITICAL Islam which is the political system of rule of a dead conquering warlord.