Wafa is being controversial - but controversy is good if people actually listen to the arguments on both sides and look for the truth.
Unfortunately, there are some Muslims who do actually share the 'Islam means we need to be ruled by Sharia' and 'we need to fight to establish Muslim rule' philosophy. There are religious nutters in all religions, we have our fair share (and, arguably, an unfair share of media attention paid on these fringe nutters).
However, the question still remains - is Islam, the religion, incompatible with Western Law.
Well, in what way could Islam (the religion) be incompatible? Islam requires a Muslim believe in God, believe Muhamad, pbuh, is His Messenger, pray five times a day, give alms/charity, fast during Ramadhan and perform the pilgrimage to Mecca if he can afford to do so. It says that one should obey the 10 commandments - specifically to not murder, lie, fornicate, commit adultery... etc etc
So, I would submit, on the religious side - there is nothing incompatible with 'Western Law' - which typically enshrines a 'freedom of worship'.
Similarly the social interactions in Islam (for 'ordinary' Muslims - those not in power) - Islam teaches that of the three levels of 'virtue' - the lowest is to be fair to all people (treat them with justice), the next level is to be kind (do more for them then you get in return) and the highest is kinship (treat others like you would treat family - do good for them even if they are ungrateful or would do you harm).
Islam also teaches how Muslims should behave as citizens of any state. God says:
4:59, O you who believe! Obey Allah, and obey the Messenger and those of you who are in authority; and if you have a dispute concerning any matter, refer it to Allah and His Messenger if you believe in Allah and the
Last Day; that is best and more suitable to the end
'Those in authority' can be taken to be those in power. We have concrete examples of this from the time of the Prophet, pbuh - where the Muslims who emigrated to Ethiopia were instructed to be obedient to and be good citizens of that Christian Kingdom. That country was always on good terms with the Muslim empire and was never invaded by the Muslims.
So lastly we come to the instructions for Muslims who are in power.
Again, Islam gives clear guidelines on how to rule. It advocates consultation with people, but doesn't proscribe democracy (it doesn't actually proscribe any form of government, just stipulates how those in power should behave). Therefore Islam is not incompatible with democracy, monarchy etc.
Of course, we shouldn't forget the Orientalist notions that Islam teaches that all non-Muslims should be engaged in warfare, or that Muslims need to conquer and rule etc. These Quaint Beliefs have been addressed ad nauseum elsewhere.
Ultimately, the proof of the pudding is in the eating. From early examples of Muslims living in peace in Ethiopia to todays Muslims living in 'Western' countries - Islam is clearly compatible with 'Western Laws'. The only way that Islam is made to be incompatible is when we construct a strawman of a militant, bloodthirsty creed that won't accept Kafir rule - a view that rightly belongs in the 18th and prior centuries (and I conced that there are examples of both Muslims - the 'mad mullahs' - and quaint Orientalists who still cherish these views).
Cheers,
Shafique