Islamic government can have non-muslim citizens as has been evidenced by history. Greece and Cyprus have been parts of Turkic Khilafat alongwith with its Christian inhabitants. No need to displace inhabitants anywhere. When Muslims become internally strong with imaan then outside they will also become strong. Non-muslims can pay Jizya tax to the govt for protection.
I have proposed a one confederation-two country system between Pakistan and Afghanistan. We can consider an EU style union between Muslim countries in Asia by making ECO effective and removing customs duties. These days its more about becoming an economic power than being a military power. When you have money, you can raise an army.
