According to Ahmad Muhammad 'Arafa, a columnist for the Egyptian weekly Al-Qahira, which is published by the Egyptian Ministry of Culture... here's the MEMRI translation... Jerusalem is meaningless to Islam.
In conclusion, the Night Journey (Isra') was not to Palestine; rather, it was to Medina. It began at the Al-Haram Mosque [in Mecca] after the Prophet had prayed there with his companion, and both of them had left it, and the journey ended at the mosque of As'ad ibn Zurara, in front of the house of Abu Ayyub Al-Ansari, in Medina, where the Prophet built the mosque known as the Mosque of the Prophet. The details of the journey of the Hijra are the very same details of the Night Journey (Isra'), because the Night Journey is indeed the secret Hijra
It'll be interesting to see how this developes in the future. There is nothing new about questioning the authenticity of Islam's claims on the Temple Mount. However, it does seem newsworthy that an official publication of the Egyptian Ministry of Culture has publicly refuted the claim.
Update:hat tip toEntre Nous for a western intellectual look. Here's Daniel Pipes on the Same theme.
According to the Arabic-literary sources, Muhammad in a.d. 622 fled his home town of Mecca for Medina, a city with a substantial Jewish population. On arrival in Medina, if not slightly earlier, the Qur'an adopted a number of practices friendly to Jews: a Yom Kippur-like fast, a synagogue-like place of prayer, permission to eat kosher food, and approval to marry Jewish women. Most important, the Qur'an repudiated the pre-Islamic practice of the Meccans to pray toward the Ka‘ba, the small stone structure at the center of the main mosque in Mecca. Instead, it adopted the Judaic practice of facing the Temple Mount in Jerusalem during prayer. (Actually, the Qur'an only mentions the direction as "Syria"; other information makes it clear that Jerusalem is meant.)
This, the first qibla [direction of prayer] of Islam, did not last long. The Jews criticized the new faith and rejected the friendly Islamic gestures; not long after, the Qur'an broke with them, probably in early 624. The explanation of this change comes in a Qur'anic verse instructing the faithful no longer to pray toward Syria but instead toward Mecca...
...Mecca, by contrast, is the eternal city of Islam, the place from which non-Muslims are strictly forbidden. Very roughly speaking, what Jerusalem is to Jews, Mecca is to Muslims – a point made in the Qur'an itself (2:145) in recognizing that Muslims have one qibla[direction of prayer] and "the people of the Book" another one. The parallel was noted by medieval Muslims; the geographer Yaqut (1179-1229) wrote, for example, that "Mecca is holy to Muslims and Jerusalem to the Jews." In modern times, some scholars have come to the same conclusion: "Jerusalem plays for the Jewish people the same role that Mecca has for Muslims," writes Abdul Hadi Palazzi, director of the Cultural Institute of the Italian Islamic Community.