Iran is a good example of what Steyn is saying. Irans people have become very western thinking yet it has been taken over by the extremist. The populations of most Muslim countries become complacent due to the fact they seem agree with part of the extremist thinking thus the majority doesnt do anything about the extremist.
But Steyn is predicting the downfall of Europe and western civilization. Someone raised the question earlier, around #51 on this thread or another echo like this one, that a Europe with a high unemployment isn't very likely to import more workers for jobs that don't exist. Additionally, life expectancy is rising--so many people are continuing to work longer before retirement.
Seems to me that those who see some kind of prophetic vision in Steyn's piece are, by association, arguing against success in Iraq. Steyn says that Europeans will be reluctant to give up the perks they have gotten--why would they be any less reluctant to give up perks, or liberties for that matter, if there is a larger population of Muslims on the continent?