The good news is that nearly seven years after Sept. 11, 2001, al-Qaida appears to be battered. The bad news is that like a prize fighter, it is bloodied, but not bowed -- leaving it still capable of dealing a devastating blow. In June, CIA Director Michael Hayden trumpeted the good news, telling the Washington Post that al-Qaida movements in Iraq and Saudi Arabia were essentially defeated and struggling elsewhere, including in the terrorism hot-bed Pakistan. In truth, some doubt Hayden's take on Pakistan, especially with Osama bin Laden and his deputy Ayman al Zawahiri still on the loose in the tribal areas along the border with Afghanistan.

But, according to experts, there is bad news, too. The Islamist terrorist threat is still evolving, and the gains made on the ground against this scourge could easily be reversed. Their warning: If we do not take heed of, and adapt to, new trends in terrorism, the tide could ultimately turn against us, resulting -- once again -- in a tragedy on the scale of 9/11 or worse.

Perhaps the most fundamental change is that al-Qaida is a different organization than it was nearly seven years ago when it struck New York City and the Pentagon. Although it still pushes a strict view of Islam, sharply sorting the world into believers and non-believers (including Muslims), and advocates violent jihad to depose of apostate governments to establish a vast caliphate under repressive sharia law, al-Qaida is not the same as it was in 2001.

Today, among other shifts, bin Laden is more inspirational than operational. Although he is still dangerous, for the moment, he is more of a terrorist icon than a terrorist operative -- as long as he is under pressure and on the run. It is believed he is not directing al-Qaida's day-to-day terrorism operations around the world like he did before 9/11, when Afghanistan provided a safe haven for him and his acolytes to plan, train and operate, courtesy of their landlords, the Taliban. Instead, he has become a forceful mouthpiece for al-Qaida's global jihad, rather than a commander in the field, providing encouragement as well as guidance to like-minded extremists.

Indeed, he and the Egyptian Ayman al-Zawahiri have developed a significant -- and highly successful -- propaganda machine, mastering the Internet and Islamist jihadist media outlets to advance their movement across the globe.

WEB WORRIES

Without question, al-Qaida's Internet propaganda machine is working overtime to spread its extremist message, seeking recruits and funding, and pushing its foot soldiers to commit acts of terror to overcome setbacks on the ground in places such as Iraq (as a result of the surge). In many ways, al-Qaida has been its own worst enemy in places like Iraq, a place it saw as a central front in its holy war. According to analysts, locals have come to see themselves as tools -- even victims -- of the terrorist group, which is pursuing its own goals, often at great cost to the people it seeks to lead.

Islamist terrorist groups prize the Web, releasing a regular torrent of multimedia products -- from print manifestos by radical leaders to online terrorism encyclopedias to videos of attacks -- for digestion by current and would-be supporters around the world. For instance, al-Qaida's online flack is a mysterious media operation called the al-Sahab Institute for Media Production, according to Daniel Kimmage, an analyst with Radio Free Europe/Radio Liberty, who penned a recent report on the issue. Using that and other outlets, such as the Global Islamic Media Front and al-Fajr Media Center, to push the party line of violence and hate, the terrorist groups seek to frighten some, while winning needed support from sympathetic audiences.

Of course, much of the message is that the West, especially the U.S. and select European countries, is in a war against Islam; that Muslims are required to defend their religion; and that violence against innocents in the guise of holy war may be necessary in defense of Islam, according to experts. Indeed, Zawahiri wrote in a now-famous letter to his now-deceased henchman in Iraq, Abu Musab al-Zarqawi: "We are in a battle, and more than half of this battle is taking place in the battlefield of the media, ... a race for the hearts and minds of our people."

Equally important, al-Qaida uses friendly media outlets to project an image of power, presence and prestige within the Muslim world -- critical for keeping the movement afloat as its indiscriminate violence has alienated many possible minions.

Make no mistake: Al-Qaida's Web work is not amateurish stuff, even in a day of YouTube-like productions. These extremist-associated outlets are feverishly improving the quality of their Web sites, videos and print materials. Also particularly interesting is the level of message control these various extremist Web sites are able to achieve -- a key to efficient and effective information warfare. (This also tends to indicate some level of coordination among these media outlets.) They also are targeting young people and women -- both new emphases of al-Qaida recruitment -- with their online propaganda. The Web sites are quickly translating their mantra into other languages, too, especially English and European tongues. Production levels of these outlets are at all-time highs, analysts say.

In fact, experts say they believe Internet radicalization is replacing in-person radicalization, which used to take place in tea houses, coffee shops, mosques, madrassas or overseas terrorist camps. This allows the Web wing to serve as an enabler for al-Qaida & Co. in building ties with the sympathetic. It also allows al-Qaida to radicalize those on the margins, using emotional issues such as the wars in Iraq, Afghanistan and Somalia to mobilize them to action. Local grievances also are manipulated to advance al-Qaida's agenda.

In addition, those already enlisted can use extremist sites to participate in distance learning by getting training and expertise in the terrorist black arts, such as making a car or truck bomb or vest for a suicide bomber, via online libraries. The growing use of the Internet to identify and connect with people and groups around the world offers opportunities to network, establishing ties and passing on experience and tricks of the trade only previously available in overseas camps, according to U.S. government officials. Some have dubbed the Internet a "virtual haven" for the terrorist.

Since the struggle with Islamist terrorism is, ultimately, a battle of ideas, dealing with the rise of extremism on the Internet is, perhaps, the most difficult challenge, especially because of its appeal to the younger generation. Which leads to the next worry: homegrown terrorists. Al-Qaida has long sought to recruit terrorist operatives already in place in the West, who have no need to get passports, nor to transit immigration and customs checkpoints to reach their targets. These operatives are locals who already have legal residency in a target country and, as such, blend seamlessly into the fabric of society, possibly not raising one iota of suspicion with their fellow citizens or, more importantly, intelligence or law enforcement.

Bin Laden has been especially keen to recruit converts to Islam. These new adherents can often easily overcome the challenges of racial profiling. But, even better, they may be eager to prove their worth to their new faith by undertaking acts of terrorism, leading to martyrdom. There is a sinking sense that Islamist radicalization is catching fire in Europe. This is based on the increased number of plots in recent years, involving homegrown terrorists there, as well as Europeans serving in violent jihad overseas. An April Europol report indicated that terrorist attacks in the European Union (EU) were up almost 25 percent in 2007 over 2006, and that Pakistan-based al-Qaida groups are the main drivers of extremism and terrorism concerns in the EU.

Plus, analysts say they believe al-Qaida and its affiliates in South Asia, the Mahgreb and the Horn of Africa are interested in recruiting terrorists from -- and then deploying them back to -- their homes in Europe. These people would have the advantage of having local passports and being familiar with Western cultures, allowing them to travel freely in and out of Europe -- and, perhaps, even to the U.S., still a key target of al-Qaida. Indeed, Hayden warned Congress in testimony earlier this year of an "influx of Western recruits" -- meaning Europeans -- into the troubled tribal areas of Pakistan since 2006, which suggests potential terrorism problems across the pond. Moreover, Europol also reported "dozens" of British passport holders fighting alongside Islamists in Somalia who may as well be training in camps there in preparation for future attacks in the United Kingdom -- or elsewhere.

As is well known, homegrown terrorists pulled off deadly attacks on public transportation systems in Madrid in 2004 and in London in 2005. Other plots, some of which included American targets, have been hatched, or carried out, in recent years in Germany, the Netherlands, France and Denmark. The British feel particularly under the gun; their law enforcement and intelligence authorities are tracking tens of active plots, hundreds of terrorist cells and more than 2,000 people in the United Kingdom who may be associated in some way with the conspiracies. No surprise: The 2006 London-based attempt to use liquid explosives to bring down 10 or so airliners over the Atlantic flying from the U.K. to Canada and the U.S. easily could have produced more victims than 9/11. Some of the suspects in the case told British investigators they intended to bomb the airliners not over the Atlantic but over U.S. and Canadian cities to increase the victim count.

It's not just Europe. We've also had terrorism attempts here, too, by so-called "self-radicalized" people who were inspired by, but had little or no physical contact with, al-Qaida. Terrorist cells in places such as Ohio, Illinois, California, New York and New Jersey targeted the U.S. government, the military and critical infrastructure. Compounding concerns is the lone-wolf terrorist, a particular worry for the FBI. The lone wolf could fly below everyone's radar because he would have no contact with other local conspirators or terrorist groups overseas that might tip off law enforcement of a plot in advance of an attack, according to a recent congressional report.

But it is not only the homegrown terrorist who worries analysts.

Of course, terrorists have long been funded by individuals, charities and front organizations. But today, they are also increasingly getting funding through illicit activities such as narco-trafficking and trafficking-in-persons. For instance, Afghanistan's burgeoning poppy crop, which is responsible for more than 80 percent of the world's supply of heroin, provides 40 percent to 60 percent of the Taliban's operational income, according to both American and United Nations' analysts. There is little doubt that al-Qaida in Afghanistan and Pakistan is getting a cut, too, providing the group with a nearly endless source of funding, considering the drug trade's profitability, continuing global demand and the challenges in fighting it. Al-Qaida and others can use narco-profits to plan, train and operate, including procuring weapons, paying for travel and expenses, gathering intelligence, bribing local officials and others, and developing support structure such as camps and safe houses.

Terrorist groups also are making money through trafficking in persons, the State Department reports. Although these networks often are used to smuggle people for the sex trade and other nefarious purposes, these same networks are moving foreign fighters, particularly into Iraq. Naturally, these highly profitable criminal networks, including those that have brought millions of illegal immigrants to the U.S. (from well beyond Latin America), also could be used for getting terrorists into the United States.

Smuggling a terrorist into the country is one thing, but of equal concern is that one of these networks moving a person across the American border also could smuggle in a weapon of mass destruction, which U.S. intelligence is still convinced al-Qaida is interested in procuring -- and using.

Al-Qaida and its allies continue to nimbly adapt their menacing means and methods to the countermeasures we take, meaning we must evolve with equal vigor to the twists and turns in terrorist tactics. Significant challenges remain in dealing with terrorism -- in the battle of ideas and on the battlefield. As such, we must guard against not only terrorism, but also our own complacency.

Heritage Foundation senior fellow Peter Brookes is a former deputy assistant secretary of Defense.