Eliza asked reasonably: . I'm not offended when my husband performs his prayers on the floor facing Mecca and intones the Arabic prescribed words. I'm a practising Christian and he's not offended by my trotting off to Holy Communion on a Sunday. If we can actually live in the same house and be tolerant, why can't people live in the same town and be likewise?

Because of the tendency of some to take certain scriptural lines as admonitions to do otherwise
http://en.wikipedia.org/wiki/Thou_shalt_have_no_other_gods_before_me

"And he saith unto them, Follow me,
and I will make you fishers of men."

I do not have at hand any references to specific reasons many Muslims consider so many things to be 'punishable insults' to Allah, though I assume there must be some.

Some people are simply raised to reason that... "If our way is the right way, any other way must be wrong."... and it is not hard to move from that to "We have the right to either convert them or punish them."

This is all subsumed under the common attitude of condemning 'different' as 'bad'.

I'm sorry if that seems too simplistic an answer, and there are of course, complex explications of the simple form.... but humans have always distrusted and resisted 'different'. It takes patience, reasoning and effort to escape stereotyped beliefs and interact sanely.