From Reuters:

An epic film about Islam's Prophet Mohammad backed by the producer of "The Lord of the Rings" and "The Matrix" is being planned with the aim of "bridging cultures."Filming of the $150-million English-language movie is set to start in 2011 with American Barrie Osborne as its producer, Qatari media company Alnoor Holdings said on Sunday.

The film - in which the Prophet would not be depicted, in accordance with Islamic rules - is in development and talks are being held with studios, talent agencies and distributors in the United States and Britain, Alnoor said.

Osborne told Reuters the film would be an "international epic production aimed at bridging cultures."

This was already done in the 1970s, in the movie Mohammed, Messenger of God, directed by Mustapha Akkad, producer of the Halloween horror movies, who was blown up by Al Qaeda in 2005 while attending a wedding at a hotel in Jordan. The 1976 movie starred Anthony Quinn getting top billings as Hamza, Muhammad's uncle (the Prophet's closest relative whom it wouldn't be impious to show on screen). According to Wikipedia:

In accordance with Muslim beliefs regarding depictions of Muhammad, he could not be depicted on-screen nor his voice be heard. This rule extends to his wives, his daughters and his sons-in-law. This leaves Muhammad's uncle Hamza (Anthony Quinn) and his adopted son Zayd (Damien Thomas) as the central characters. During the battles of Badr and Uhud depicted in the movie, Hamza is in nominal command even though the actual fighting was led by Muhammad.

Whenever Muhammad is present or very close by, his presence is indicated by light organ music. His words, as he speaks them, are repeated by someone else such as Hamza, Zayd and Bilal. When a scene calls for him to be present, the action is filmed from his point of view. Others in the scene nod to the unheard dialogue.

Getting funding was difficult, nearly shutting down filming until Colonel Qadaffi ended up as the main backer. (The production is parodied in Richard Grenier's novel The Marrakesh One-Two, where the film crew wanders about the Muslim world looking for a government with enough oil money but not enough fundamentalism to back the film. At the end, they are so desperate that they are on the way to one country so awful they always swore they'd never visit: Iraq.)

According to Mark Deming:

Unfounded rumors had it that Mohammed would not only be depicted in the film, but that he was to be played by Charlton Heston or Peter O'Toole. This resulted in angry protests by Muslim extremists, until director Moustapha Akkad hired a staff of respected Islamic clerics as technical advisors. The advisors butted heads with Akkad, and they quit the production, which led the Moroccan government to withdraw their permission to film in their country. In time, Akkad ended up shooting on location in Libya under the sponsorship of Muammar Qaddafi, which presented a whole new set of political and practical problems for the filmmakers. Finally, when the film was scheduled to premier in the U.S., another Muslim extremist group staged a siege against the Washington D.C. chapter of the B'nai B'rith under the mistaken belief that Anthony Quinn played Mohammed in the film, threatening to blow up the building and its inhabitants unless the film's opening was cancelled. The standoff was resolved without explosion or injuries, though the film's American box office prospects never recovered from the unfortunate controversy.