Reddit mentions of Muhammad and the Believers: At the Origins of Islam

>Muhammed started the whole mess with the Jews.

Historians can only do so much, but if you leaf over history with a critical eye and look for contextual clues, it can be assumed that Muhammad initially tried to reach out to the Jews, but was shunned. Which is why some historians assume he had a change of heart when it came to changing the direction of prayer from Jerusalem, to Mecca, while traditionalists would argue it was divine influence, the former makes more sense to me.

>Historically, Islam spread by the sword.

No, it wasn't, atleast not to the extent you're putting in. You answered the question yourself, Islam would give the soon to be conquered lands those very options, it was a very efficient process. They would build garrison cities, so they wouldn't mix with the locals, but honestly benefit from the added income from taxed locals. Islam during the Ummyad dynasty actually had an issue with too many people converting, as a means to avoid paying the dhimmi tax, so there were work-arounds to ensure the ruling dynasty had access to consistent funds.

Battles were had in some cases, but not to the extent you're assuming. If anything, the biggest battles for the early Muslims were the ones between themselves, some years after Muhammad's death was the first Islamic civil war, and the years to follow gave way to even more civil wars.

If you're interested, I think this book offers some great insight into Islamic history, and the author brings in some interesting theories. Fred Donner's Muhammad and the Believers: At the Origins of Islam