As an attempt to resist negative stereotyping, this has to be deemed a failure.
I can see why it might appeal. I like the song, and I enjoy the view of people arsing about to an infectiously cheerful tune as much as anyone. And if this weren't an attempted intervention on the terrain of cultural politics, it would be sweetly enjoyable. However, it's a problem, or rather it's illustrative of a problem, a wider strategic dilemma. Because this looks like an attempt to undermine 'scary' representations of Islam by showing a happy, smiling, dancing face. It's sweet, but it's also pandering. It is also indicative of a wider approach that I think is divisive and plays into the well-known 'good' Muslim/'bad' Muslim dichotomy. How?
Well, just take some examples from recent news headlines. We learned: That there has been a sharp increase in the Muslim population in prisons over the last decade, with Muslims now making up 27% of all prisoners in London. That Moazzam Begg has been locked up again. And that the government is spreading Daily Express-style rumours of an 'Islamic schools plot' and has put 'counter-terrorism' apparatuses behind an investigation into the allegations. One could go on, but the point is there are quite a large number of Muslims who have no particular reason to smile and dance - whether because they're poor, or because they are politicised, or because they have been criminalised. For one reason or another, they've been brought under the grid of state surveillance and sanction for reasons which bear directly on their being Muslim.
Now, if the problem of Islamophobia is construed as being purely or primarily a public relations battle, and if stereotyping is understood as the main form of racist oppression faced by Muslims, then of course this strategy is comprehensible. Combat the negative images, demonstrate how much we heart things that other people heart, how normal we are, and people will stop hating us, discrimination will wind down, tabloid frenzies will stop working, aggressive policing will abate, and politicians will lose their power to divide and control us. If the main problem was public opinion, all this would make sense. However, I think that's a perspective that can only really make sense for a segment of relatively middle class or bourgeois Muslims (who seem, on appearance, to make up the majority of those featured in the video). If you are among those who are surveilled in universities and estates, or stopped by police, or dragged into Paddington Green, or 'rendered', then it's hard to see public opinion as anything but a subsidiary element of a struggle for political empowerment.
It seems almost pedantic to say so, but I think that a) public opinion is not the main problem, and b) insofar as opinion means ideology, and I take the terrain of ideology very seriously, it can't be engaged in on a short-term public relations basis. I think you win ideological battles by changing the underlying coordinates within which popular judgments about issues are formed, which is a long-term strategy that requires taking and holding unpopular positions until they become popular - in other words being disagreeable, not happy, not amenable, making a fuss, and so on. Not only that, but there are clearly issues which cannot be addressed in any but a contentious manner. As such, ingratiating oneself on the basis that one isn't like 'them', the 'bad' Muslims, is surely a divisive strategy that not only does not serve the interests of those most likely to be villainised as 'bad' Muslims, but is also limiting for those who might expect to benefit from being classed as 'good' Muslims, who might themselves have to be disagreeable from time to time.