All of this fuss will never end. Each individual have their own opinion on this issue. It’s best to follow what Prophet Muhammad S.A.W. saying; when we are in differ about any issue what we need to do is to refer back to the al-Quran and his Sunnah.
Before I give any comments, we need to know what the the Quran says about the Christians. This is important so that there are no confusion between the difference of Islam and Christians.
Were ye witnesses when death appeared before Jacob? Behold, he said to his sons: "What will ye worship after me?" They said: "We shall worship Thy God and the God of thy fathers, of Abraham, Isma'il and Isaac,- the one (True) God: To Him we bow (in Islam)."
That was a people that hath passed away. They shall reap the fruit of what they did, and ye of what ye do! Of their merits there is no question in your case!
They say: "Become Jews or Christians if ye would be guided (To salvation)." Say thou: "Nay! (I would rather) the Religion of Abraham the True, and he joined not gods with God."
Say ye: "We believe in God, and the revelation given to us, and to Abraham, Isma'il, Isaac, Jacob, and the Tribes, and that given to Moses and Jesus, and that given to (all) prophets from their Lord: We make no difference between one and another of them: And we bow to God (in Islam)."
So if they believe as ye believe, they are indeed on the right path; but if they turn back, it is they who are in schism; but God will suffice thee as against them, and He is the All-Hearing, the All-Knowing.
(Our religion is) the Baptism of God: And who can baptize better than God? And it is He Whom we worship.
Say: Will ye dispute with us about God, seeing that He is our Lord and your Lord; that we are responsible for our doings and ye for yours; and that We are sincere (in our faith) in Him?
Or do ye say that Abraham, Isma'il Isaac, Jacob and the Tribes were Jews or Christians? Say: Do ye know better than God? Ah! who is more unjust than those who conceal the testimony they have from God? but God is not unmindful of what ye do!
That was a people that hath passed away. They shall reap the fruit of what they did, and ye of what ye do! Of their merits there is no question in your case:
Once you read these verses from the Holy Quran, you will find that Allah gave revelation to Abraham, Ismail, Isaac, Jacob, the tribes, Moses, Jesus, Muhammad S.A.W. and all the prophets. However, Jews and Christians is already off the path the Religion of Abraham.
Abraham was not a Jew nor yet a Christian; but he was true in Faith, and bowed his will to God's (Which is Islam), and he joined not gods with God.
The Christians today claimed that Jesus PBUH is the son of Allah. Allah S.W.T. explains to us some details in the Nobel Quran verse 5:12-10. I wont post it here though, you need to read up by your self. Lets examine what Allah says regarding Jesus as Son of Allah in the Quran:-
And the Jews say: Uzair is the son of Allah; and the Christians say: The Messiah is the son of Allah; these are the words of their mouths; they imitate the saying of those who disbelieved before; may Allah destroy them; how they are turned away!
He(Allah S.W.T.) begetteth not, nor is He begotten;
In blasphemy indeed are those that say that God is Christ the son of Mary. Say: "Who then hath the least power against God, if His will were to destroy Christ the son of Mary, his mother, and all every - one that is on the earth? For to God belongeth the dominion of the heavens and the earth, and all that is between. He createth what He pleaseth. For God hath power over all things."
As a conclusion, the Christians are people who claim to follow Prophet Jesus PBUH but they are actually led astray by following man-made religion. For Christian readers, please take note that this is what Allah S.W.T. revealed to us in the Nobel Quran. Even the Bible itself agrees that Jesus is not the son of Allah. (I can prove this; you just need to email me)
Now that the difference between Christians and Islam is clear, let us proceed to the issue of the Christians using the word ‘Allah’. I examine this verse many times and I find that its best to settle this issue.
And argue not with the People of the Scripture unless it be in (a way) that is better, save with such of them as do wrong; and say: We believe in that which hath been revealed unto us and revealed unto you; our God and your God is One, and unto Him we surrender.
Considering the fast that Christians were once not astray and follows the Scripture, in my personal opinion Christians are allowed to use the word Allah because Allah S.W.T is the one and only God.
The Malays in Malaysia are worried if the Muslims will be confused. I think anyone who reads the Quran (muslim or non-muslim) will know who are the Christians and what is their relationship with Allah. Rather than the Muslims getting confused, I personally feel by allowing Christians using the word ‘Allah’ will benefit us because at least they know that their Lord is Allah.
The one and only scripture on earth that have the word ‘Allah’ is from the Holy Quran. If you choose to accept Allah as your God, then you are on the right path. Read the scriptures (Bible, Torah and Quran), you will know which religion is the True path. I chose Islam, how about you?