Tom,
I have not read this book, but I have read some of Karen Armstrong's other books. In my opinion she has a tendency to focus on what she sees, and will often let critical thinking go out the window to make her point. Some of the stuff that she writes is from an extremely Fundamentalist Christian POV, which she apparently had a split with recently in God's Warriors. I have not read that eithet, but the reviews among the press that used to slavishly quote her indicates that she departed from the things they support.
That said, I agree that Fundamentalism is a relatively modern invention for the most part. But she seems to be ignoring the fact that throughout history there were revivals in Christianity that tried in various ways to get back to the church that Jesus founded. These were usually the result of scientific and cultural differences that got out of hand in the opinion of some people.
The rise of Islamic Fundamentalism could be viewed as an Islamic revival. It has moved to the fringes now, but Islam as a whole has changed as a result. The passages in the Koran that call for converting of the unbeliever by force are being reevaluated. the ones that call for tolerance are also being reevaluated. Where this will all shake out in time is beyond anyones guess at this time.