The past is not just the background to the present, it shapes who we are, where we start out in time and our viewpoint. But it is important to view it with some level of accuracy as it viewed itself, rather than simply back-projecting our own modern categories and mind-sets . Hindus today have a clear idea of who and what Muslims are and their attitudes towards them. Hindus centuries past, if they even gave much thought to the new religion, might have viewed Islam as just another sect that would take its place in the Indian system. For their part, many of the first Muslims of India were adventurers bent on fortune and glory, and their role as ghazis were secondary to their primary mission as plunderers. To take a specific example, many Sunni Muslims view Aurangzeb as a good and righteous ruler, he was pious, abstemious and just in the Islamic context. He made great efforts to convert Hindu lords to the One True Faith in comparison to his predecessors. One can attribute these acts to Aurangzeb's deeply held religious beliefs, or, one can view them in the context of his situation, dealing with Hindu rebellions and perhaps concluding that now was the time to end the factious religious pluralism that made the Mughal state difficult to manage. His conclusions might have been influenced by his piety, but his intent might have been far more practical than his hagiographers portray. The conversion of pagan European kings, who are later sanctified by the Church, is often quitely clearly the result of political rather than religious considerations as recorded by observers of the day . What psychologists call attribution error seems to be rife in popular reconceptualizations of historical events.
There is also the matter of a gap between the elite and common levels of social standing. Muslims and Hindus of a given social class in the past (and to some extent today) likely shared a similar outlook, attested by the history of Sufis and Baul poets and minstrels being revered by both the rural Hindu and Muslim communities together. Reverence of Sufi saints by Muslim peasants was only a few degrees different in nature than the local gods that lower caste Hindus often worshipped . Similarly, abstract conceptions of religious philosophy promulgated by Brahman sages might in tone and style share much more with the austerity of orthodox Islam than it would with "folk Hinduism." Today the Brahmo Samaj sect of Hinduism can be considered a "Unitarian Hinduism" while Arya Samaj is a "Protestant Hinduism." Illiterate Hindus in Tamil Nadu, indigenous Catholics in Peru and Muslims in East Java might very well resemble each other more than they would the practice of Iyer Brahmins, white Catholics from Lima and santri (orthodox Muslims) from West Java respectively.
As education and Western ideas of nationalism and identity take hold , Hindus and Muslims whose ancestors were illiterate peasants who lived similar lives, begin to re-think of themselves as members of an expansive confessional affiliation rather than just a member a family in a particular village. Villagers may reach a level of affluence that they can afford to bring in a religious specialist, a Brahmin or an Imam, who can reform their practices to conform to the standardized norms spreading through the affiliation and agreed upon as authentic practice. In such a fashion, where in the past villages in Bengal that were Hindu and Muslim which might have celebrated holidays together and blended their religions without thinking it peculiar, could diverge in practice and outlook as they share more rituals and beliefs with other villages in distant states, bound by abstract confession rather than sharing an affinity because of proximity and experience. After a few generations, as the middle class begins to lead a mobile and uprooted life, the scions of any given village forget the local shrines and saints that both Hindus and Muslims would revere, binding them together across the chasm of religion.
-- Razib Khan
 Read a funny article recently (sorry, offline), Vasco da Gama arrives at the Malabar coast, and notes the presence of "Moors" and Hindus. The Hindus he thinks must be Christians of a sort, so when he sees a Hindu temple, he walks in, sees Brahmins in robes and assumes they're monks and prays solemnly. I guess it can be easy to get confused sometimes when you're in a strange place.
 Many of the Scandinavian kings used Christianity as a tool to unify their nations and destroy the power of independent nobles. In the Baltic the early Grand Duke of Lithuania, Mindauguas, outwardly converted to Christianity after correspondence with the Pope to bring his people into the fold of European civilization, but it seems clear that he continued all the old sacrifices so that the gods were placated. The saints of the knights of old seem to have a lot more in common with the gods of yore than the martyers of the classical period.
 Cross-cultural examples are myriad. According to the book The Germanization of Early Medieval Christianity, the Christian conversion of the Germanic peoples were perfunctory enough that they changed Christianity as much as the reverse, so that a cosmopolitan other-worldly faith was transformed into a muscular tribal religion concerned with power politics. I think Dr. Russell's book is a bit simplistic, and other articles by him indicate to me he has an axe to grind, but the seed of truth clearly is present in what he is saying, the transformation of gods into saints is a cliche that happens to be true (and gods into devils as well).
 Though I do not believe that the "national idea" was born during the French Revolution, I believe that it served as a catalyst for its spread, and its eventually victory over alternative models such as the empire. Additionally, I believe in the context of India, it was the British who pointed to a villager from modern day Punjab, and told him, "You are Punjabi, not like the Tamil, Bengali or Gujarati," insofar as ethnic identities became more fixed and self-conscious.