Any analysis of a foreign culture is necessarily going to happen across a cultural chasm. As such, it is inevitable that elements of that culture under study will be filtered through the observer's own. The whole point of cultural analysis is to try and understand something alien; the human way to do this is to try and relate it to something more familiar. As a result, the culture under study will be bent and folded (and even mutilated, depending on the skill or lack thereof of the observer) to fit into predefined (and alien) categories.
There probably is always some element of condescension involved as well. Cultural superiority is ingrained deeply by force of habit and the comfort of the familiar. How many times have we seen statements about the West from Islamic sources that seek to portray the West as inherently sinful, hedonistic, without morals, etc. ? Perhaps Western analysts have learned to mask or even suppress their condescension better. But is that condescension the core of the analysis or a side effect? Is the value of the analysis totally negated by it?
A modern day westerner writing about the middle east (which, it should be noted, includes we western muslims as much as it does someone like Michael Totten) will not be immune to these foibles. In my opinion, the thesis of orientalism draws a false line between east and west. In that way Edward Said is as guilty of perpetuating the "Clash" as Samuel Huntington (personally, I favor the Gash of Civilizations theory instead). When i think of Oriental I think of the far east (the Chinese civilization and its offshoots). The middle east is the frontier between east and west, but I don't think you can argue (especially with the adoption of western leftist parliaments and political systems) that its wholly distinct. Neither are they distinct in the religious sphere - after all, there are three great Abrahamic faiths, and they are coterminus at Jerusalem.
I think that we cannot expect a non-muslim writing about the middle east to be too sympathetic to our muslim axioms. It's our task to explain why orthodoxy and faith are important, to rescue terms like hijab and jihad from the negative connotation, to take our own pride in our orthopraxy. A non-muslim writing about the middle east will look for what they know - bars, liberalism, hot chicks - whereas we might see something different. That's not orientalism, its simply culture shock.
Overall, orientalism is badly named. It describes a relationship between colonial powers and its colonies more than it does east vs west or Islam vs (anything). I can't help but speculate that Said's motivation was really to try and establish a distinction between east and west as proxies for the palestinians and the israelis. That conflict is all the more tragic when seen as a fraternal one rather than one at the very frontier between two civilizations, alien and opposed. There's no reason however that the rest of us, who are not embroiled in a life or death struggle over holy land, need to be bound by this formulation. I think we as western muslims especially need to reject the concept of orientalism out of hand.
UPDATE: great essay in The Guardian, "Orientalism is not racism". In my opinion the most important part of the argument is as follows:
Today the west is bleakly incurious about the history of Islam, its art, peoples and learning. There's a blank wall of terror. This wall has been strengthened by Said's book because it closes down a crucial way for cultures to encounter one another: it closes down romanticism.
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