Those groups who advocate the establishment of an "Islamic state" and some vague concept of caliphate like JI, Hizb-ut-Tahrir are going against Quranic principles and traditional Islam by using Islam for political purposes. These movements also gained force because of mismanagement and lack of proper democratic governance and frequent military coups.
A short appraisal on Islam and Democracy by an Islamic scholar is here:
The Concept Of Democracy in Islam
The article you refer describes exactly what I believe true Islam to be. However, a religion is more commonly known not by what it should be but what its followers practice. Regret to say that despite the Quranic verse “La ikra ha fid deen” meaning that there is no coercion in Islam. We see that in practice the case is entirely different.
There is no denying the fact the majority Sunni (accept the hereditary Khilafat) as well Shia (believe in hereditary Imamate) Islam as practiced today, does not follow democratic tradition.
There have been prominent Mulsim leaders of the subcontinent such as the famous Ali brothers who were willing to give their life for what was a very degenerate dynastic kingdom in Turkey just because Turkish Sultans styled themselves as Khalifas after they captured Hijaz. You must be aware that opposing a Khalifa or Amir ul Momeneen is considered a ‘Wajib ul qatl’ act.
Islam as preached and practiced by the followers of Abul Wahab and Imam ibne Timiyiah is more in vogue ever since Saudi Arabia became rich with oil money. We have seen women being caned in Afghanistan just because a small part of their hand was showing. I have witnessed zealous pasdaraan in Iran insisting by force that young girls as little as 6 year old should cover their heads. Not one Islamic scholar of note has voiced concern over this coercion. JI bigots reached the limit when they cried “ Sufi Mohammed auo hum tumharey saath hain’ with Sufi Mohammed openly declaring that even talking part in elections is un Islamic. There are many honorable members of this forum who also believe in the Taliban style Islam and would jump to their deference at the slightest provocation.
Problem lies in the fact the religion has always been a dogma; each sect firmly putting forward their opinion and not willing to accept those of others. The Islam that I believe in, is not against democracy but the Islam that majority of people in world practice and believe is a different matter altogether. It reminds me of a rubayee of Omar Khayyam.
Quamain mutafakkar und dar rahe deen
Quamain mutahayyar und dar shakko yaqeen
Mee tarsam keh bang ayad z kameen
Ka eey bekhabraan rah na een ast wa na een.
Translation.
Some are thoughtful on their way
Some are doubtful, so they pray.
I hear the hidden voice that may
Shout, "Both paths lead astray