It's used in that way, certainly, and sections of the left have a problem reconciling their manifest encouragement of plurality with the realities of what that means you may have to tolerate. But nonetheless Islamophobia refers to an irrational fear of Muslims or Islam, regardless of whether people abuse the term - in which case the fault lies with them and within that issue, not the term itself
I mean people often use the term Anti-Semite as a stick to bash critics of Israeli policy with - does that mean Anti-Semitism is a horseshit notion
The issue is with the abuse of the term, not the reality of the concept
I wouldn't worry about random do-gooders attacking you for criticising KSA... a comment on them is by no means a comment on muslims in general... my liberal muslims friends hate KSA for being too barbaric and puritanical, and my conservative muslim friends hate them for being decadent and corrupt
edit - I also think it's worth pointing out that Europe is pretty hysterical at the moment - issues of nomenclature aside, there's definitely a growing number of people who regard Muslims as fifth column in Western Society. If islamophobia is an inappropriate then what is appropriate? Could say Far-Right, but this brand of prejudice doesn't take the dim view of homosexuality, Jews, feminism and the disabled that your average far right supporter does