“Now, if there are “genuinely moderate Muslims,” how does that fit with Ali’s argument that “Islam was simply incompatible with modernity and feminism?”

Well the answer to that is simple: it’s not supposed to fit. Ali and those like her must paint Islam itself as incompatible with modernity, full-stop. If we were to accept that genuinely moderate Muslims actually exist, the arguments used to condemn the faith as a whole would collapse.