Only if none of the gods of the religions are real. If one of them is real, we would all be better off following said god's rules.
Heh, that's definitely true. I get the feeling that if there really is a supreme being though, chances are good that he doesn't resemble any of the major religions. It's hard for me to reconcile the idea of a supreme being, creator of the universe, who acts the way depicted in the various God-based religions. But that's just me
The big difference between Islam and Christianity is that Jesus said not to seek worldly power (not in those exact terms, but that was the gist of what He said) but Islam says to seek worldly power. An Islamic Theocracy is actually following their holy book, but a Christian Theocracy is violating it. The only Christian who is allowed to run a Theocracy is The Messiah when he sets it up in the end times.
Basically, for Islam to move forward it must move backward. It must return to following the rules of Islam in the Quran - which is to not slaughter people who only want peace with you.
I'm not expert enough to say whether or not your interpretation of the differences is right, but I still think embracing religion as a way to run a government is a problem no matter what religion it is. You can argue that the Christian governments of the past were interpreting their religion wrong, but the fact is that history doesn't offer any better examples of Christian governments than Islamic ones (in fact one could argue the opposite is true). Even today, Jesus' arguments against seeking worldly power seem to be falling on quite a few deaf ears, at least in the US. Maybe nobody is setting up a theocracy, but they're certainly after more worldly power than I suspect Jesus had in mind...
The problem with religion is that you can often use it to support anything you want, and fanatical belief makes it easy to justify almost anything. If, tomorrow, every single Muslim in the middle east became a Christian, I suspect leaders of countries like Iran and Saudi Arabia would end up justifying their religious zealotry without too many problems...just as Christian countries have in the past.