What are the difficulties with the belief that the al-Aqsa mosque described in Islamic tradition is located in Jerusalem? For one, the people of Mecca, who knew Muhammad well, did not believe this story. Only Abu Bakr, (later the first Calif,) believed him and thus was called al-Siddiq (“the believer".)
The second difficulty is that Islamic tradition tells us that al-Aqsa mosque is near Mecca on the Arabian Peninsula. This was unequivocally stated in "Kitab al-Maghazi," a book by the Muslim historian and geographer al-Waqidi. According to al-Waqidi, there were two "masjeds" (places of prayer) in al-Gi'irranah, a village between Mecca and Ta'if - one was "the closer mosque" (al-masjid al-adna) and the other was "the further mosque" (al-masjid al-aqsa,) and Muhammad would pray there when he went out of town.
This description by al-Waqidi which is supported by a chain of authorities (isnad) was not "convenient" for the Islamic propaganda of the 7th Century. In order to establish a basis for the awareness of the "holiness" of Jerusalem in Islam, the Califs of the Ummayad dynasty invented many “traditions" upholding the value of Jerusalem, which would justify pilgrimage to Jerusalem for the faithful Muslims. Thus was al-Masjid al-Aqsa "transported" to Jerusalem. It should be noted that Saladin also adopted the myth of al-Aqsa and those "traditions" in order to recruit and inflame the Muslim warriors against the Crusaders in the 12th Century.
Since the 7th Jerusalem and the Temple Mount has been a very useful political tool for Muslim leaders. They use it to inflame the passions of people. Arafat is just but the latest example. In 2000, he used the Temple Mount as an excuse to begin the Second Intifada and suicide bombers murdered hundreds of innocent lives. Just as the Mufti of Jerusalem did in the 1920's and the 1930's and all because of political expediency.