Fr. Philip Neri Powell, OP, has a great insight into the state of the Church at this juncture in history over at his blog 'Domine, da mihi hanc aquam!' An excerpt:
What both John Paul II and Benedict XVI have been trying to communicate to the Church and the world is this: the time for critical demolition is over. That project is done. It is time to retire the dynamite, return the bulldozer, fire the demolition crews, and start to rebuild on the foundation left for us by the apostles. At the very least, this means a return to the documents of Vatican Two, read and implemented through their continuity with the tradition and reason. They are not calling us back to an uncritical embrace of Baroque Thomism and manual moralism. Nor are they asking us to live in the illusions of a warmed-over 1950's nostalgia. All they are asking the Church to do is start in the present, look back to where we came from and forward to where we are going without getting lost in the bitterness and cynicism that a life of complaint and opposition engenders.
Back to me, here. What we, on all sides of the Church's spectrum, need to start doing is not name calling and the 'They're out to destroy the Church!!!' Now, how do we, following the example of Pope Benedict, work to re-establish unity in the Church.
All players must be involved, and the greatest difficulty is that it takes a large dose of humility on the part of these players to swallow pride, listen to the opposing view, and move forward in a spirit of continuity with the history of the Church.
So, while we can't resurrect a 1950's style nostalgia, we must resurrect the 'Catholic Identity' that was present there, but now ever more so in dialogue and critique of the culture around us. Hence, we will be in the world, without being of the world.
To quote Fr. Powell, from the above link: "Is that so hard?"