Peace Abdullah,
I understand exactly what you're saying, and this is partially the way I was interpreting it. I believe that Allah exists completely independent of us, since He is the only thing in reality (everything comes from Him and returns to Him). In this same sense, though, Allah exists within and without us...
I think, personally, that it's compatible with the concepts of a higher and lower self, the higher self being a manifestation of Allah (the "spirit" that He blew into Adam/mankind), and the lower self is the "satan" that continually misleads and restricts us, if we allow it. Therefore, based on this idea, in a metaphysical sense, we can ALL be regarded as being "God". However, in the complete sense, beyond the metaphysical idea, we can be regarded as God, as long as we manifest the traits of our higher self (Allah), since this is literally where we came from and where we will return. Those who choose to succumb to evil, in the form of their lower self ("al shaytaan"), become devils, rejectors, disbelievers, hypocrites, etc.; when they return to their Creator, they will be cast away, or placed in an uncomfortable place or position. The opposite is true of those who manifest the qualities of Allah, being manifestations of God Himself, who work righteousness. There is a difference between a creation and a manifestation. By acknowledging and embracing our spiritual conciousness, the higher self, which is the breath/spirit of Allah (or Allah in man), then we can become BOTH of these, thus becoming reflections and manifestations of the Creator.
When viewed from this standpoint, it becomes clear why the doctrines of the previous scriptures included statements like, "Ye are gods and of God" (Psalms); "You shall become God Himself, formations of the gods" (Vedas); "He (God) is among us and within us, as we are Gods" (Contentings of Horus and Seth); "He who has seen me has seen the Father also", and "The Father and I are one" (Biblical gospels); "Man cannot die, since the spirit-man is God. While God lives, man cannot die" (Reflections of the Aquarian Gospels, derived from the akashic records); etc....
Now, I disagree with your metaphysical idea regarding the total encompassing state of Allah, even though this can also be seen as a reality; I don't disagree with the physical aspect of it, but I disagree with the spiritual aspect of it. I think everything in nature is in a state of progression. Science says that everything progressively evolves to a higher plane (stage) of life. Humans are regarded as being the peak of that evolutionary process, even in the Qur'aan, since even the angels must submit to us. So, where do we go from here? And yes, the highest realization is that I am God, and I agree that many fail to understand this without falling into the trap of pantheism. However, we have to take into the consideration of the evolutionary process. Allah doesn't submit to Himself, which is why Allah can never be called a "muslim". In reality, we are all God, complete manifestations of the Divine; however, this can only be attained when we submit to Allah within us (our higher self). This is the meaning of the Biblical statement that we were made in 'the image and likeness of God'. In realizing the peak of our potential evolution, we become Allah's "vicegerants" here on earth.
Do you consider this belief "shirk"?