The west (principally the U.S., France, and Britain) has been screwing around with Arabs and Muslims for more than a century (including training thugs to use religious fundamentalism as a useful method of control).

Lately three developments have fundamentally changed how Arabs and Muslims respond:

1. There is growing consciousness among more Arabs (in particular) that they are stuck under repressive regimes with limited opportunities, and that the U.S. backs these regimes

2. The likes of Al Jazeera fuel bitter outrage and hatred of the U.S. by televising, nightly, carnage from the Iraq debacle and Israel, which we now support in any outrage, no questions asked.  (Check out Henry Siegman in the New York Review of Books on Sharon's blatant, appalling "apartheid" strategy -- they feel so untouchable that they've casually outlined it in detail in recent interviews for major newspapers: http://www.nybooks.com/articles/17591 )

3. We trained and showered resources on the Mujahadeen (our brilliant response to the Russian invasion of Afghanistan), from which one or more broad international networks -- Al Qaeda for starters -- have now sprung; so now there is a transnational, sophisticated set of organizations to benefit from and channel some of the outrage.

A propaganda campaign is going to fix this?  Maybe Wolfowitz wants to use his new sub-ministry of propaganda (assuming its funded) to try and buy Al Jazeera.  Helping steer and consolidate most of U.S. media into the hands of foaming-at-the-mouth right-wing partisans seems to have worked for them in the U.S -- they probably think they can just replicate the business model overseas...