I treat this literally, as do many of the "peace" churches in Christianity and the trends of conscientious objectors in some of the other churches.
I believe that Jesus was calling us to behave in a new way- to literally love our enemies, pray for them, to not repay violence with violence. I do not believe you can really love someone and be violent against them at the same time. It is fine and well to say that one loves the Iraqis and then bomb them, but it really makes no sense from my perspective. The more I recognize that all beings are priceless to God, and that they contain the light of God (even if they don't themselves recognize or honor it), the more I God corrects my tendencies to be self-centered- to anger, to be irritated, to be defensive. It's begging the whole "What Would Jesus Do?" argument. Would Jesus bomb Iraqis? Would He be OK with killing innocent civilians?
I just think the issue is pretty clear. Really difficult, yes. But clear. I suppose if God Himself ever comes to tell me otherwise, as He told people in the OT, I will change my mind. But in the meantime, I follow Christ's example, not my government's or culture's. Christ suffered unto death as an innocent, and in so doing, He changed for all eternity the relationship between God and humanity. And if I am called to take up my cross and follow Him, to love my enemies and pray for them, to turn the other cheek... how can I justify doing what is clearly oppositional behavior?
As for defense... in most cases, defending oneself does not have to mean violence, and it certainly (in my beliefs) does not extend to defending man-created institutions such as governments. I don't allow myself to be trod upon, but I avoid this by leaving the situation and relying on God, not by violence. Many social and personal injustices are healed through non-violent means- just look at Ghandi and Martin Luther King. And as I've said before, this is not idealism. I have been in a situation in which I was abused and faced the possibility of being killed, and I did not respond with violence, nor am I embittered against him. I don't take credit for that, but rather use it to encourage others- that Christ can work in our lives to peacably end injustice and suffering, and to propose that violence begets violence and does not ultimately give peace to anyone.
It may seem quite un-American, but on 9/11, I prayed just as much for the terrorists and felt just as badly for them as I did for the Americans who were killed. The terrorists, in some ways, were in an even worse position. They were so obviously lost and had so thoroughly forgotten the light of God within them... so out of touch with God to do such acts. It is so sad.
I suppose I am aligned with Quakers and Amish and such on these issues. As one Amish father said recently after the shooting of the girls at an Amish school (by a non-Amish man), he felt the most for the murderer (who had committed suicide after his crime). When asked why, he explained that the girls were cared for by God and were now in heaven, but the murderer was obviously so far from God's peace and love... and now he was lost forever. When this grieving man was asked what he would do/say if the murderer was still alive and in front of him, he said he would bring his Bible and pray with the man, encouraging him to give up his troubles and suffering and evil ways- to give it over to God and be renewed in Christ. And this, from a people who were relentlessly persecuted... originally killed for their beliefs, thrown in jail in America for following their beliefs and not going to war, and still get the misunderstanding and ridicule of so many.
Of course the peace churches aren't perfect- no one is. But on this issue, I think they show an inspiring example of embracing the literal words (and actions) of Christ.