It's really not a new development as far as Burma goes.
The rhetoric about purity, both religious and ethnic, goes back to even the Pagan era (and you see parallel rhetoric all through Khmer and Siamese history), and was well documented during colonial times with regards to the new influx of Indians, Muslims, and Chinese. But ethnic (and by extension religious) mixing in particular also was a heated issue of debate during this time, and a Burman who married a non-Burman would almost always have some alteration in status for the Burmese partner and his/her children, with marriage to Hindus and Muslims conferring the lowest kind of status, Chinese a low status, and a higher kind of status to Europeans, and Japanese when they were in charge.
Another perennial theme in Burma is the inciting to violence by the word of a monk. More or less what has happened for centuries is, if a monk denounces a group or someone in particular, either by his own motivation or by corrupt motivation/bribe, if he is well respect the laity will generally act violently against them. There was a few incidents in the 50s when monks spoke out against movie theatres, and many were burned to the ground. Of course, there's also monks who famously tip over cars, but it's harder to get away with that.
Ven.Wirathu is therefore nothing new in Burma, he's definitely not the Bin Laden of Burma, he's just applying the same rhetoric that has been standard for some
Burmese monks in Burma for centuries, to the issue of Burman/Buddhist decline (Burman = Buddhist in Burma, there's the popular phrase there, "To be a Burman is to be a Buddhist"). Clearly, any religious divide is intrinsically linked to a racial divide as far as Burma goes.
It's also definitely clear that the government is concerned, and the perception of them as upholding Buddhist principles and emulating the role of the now long gone kings is very important to them. It's very important that the issue not remain at the level of mob violence, since that'll just lead to more killing.
Also, at the same time that the Arakanese issue is ongoing, is the issue of tribal/hill independence movement, some of which are in guerilla phases. Burma, fundamentally, has rarely been united as it is today, just like any other country in Indochina. The minorities always have seen themselves as separate nationalities. I personally don't think that Buddhists need to have any attachment to internationalism. If a people is so distinct as to kill others who aren't like them (and certainly Arakanese have killed Burmans too), then they probably should be kept apart (just as a murderer is kept apart from society for its safety).
I really don't think that we should attach to national identities so much (which is part of the issue, with the Myanma renaming the country after their own ethnicity and all), and from the Buddhist perspective, for Buddhists own safety and prosperity, and that of other ethnicities and religions, in the case of Burma, splitting the country up might be the best idea.
And when the next election comes along, which will most likely be free and fair, you'll notice that the next government's main political divides will likely be along the lines of ethnic and minority interests, rather than Junta non-Junta interests as it has been for the last 50 years. If you're going to have a democracy, it's always easier with a homogeneous population, so giving into the demands of minorities and separating them might be the best solution. Really, the same applies to China. If they separated ethnically distinct regions they'd have a much easier time in the world, and their perception among other nations would improve, and if they were to transition to democracy, as everyone seems to be demanding, it would make the process much easier. Burma can thus take advantage of the benefits and the avoid the disadvantages of the generally universal human tendency towards asabiyyah