Locke seems to have been a bit of an idiot

Honestly, what you said seems to be the gist of what Locke said. As far as my own understanding, Locke's Letter Concerning Toleration has as much to do with the states conception of religion than his own personal conception of faith in particular. But by no means do I suggest that Locke does not forward his own thoughts on faith and religion. He does... at least in a subtle way.

Locke is certainly against state sponsored religion (national religions) which persecute "under the pretenses of religion." Locke definitely thinks there should be a separation of religion and state. States he argues, should be only concerned with providing civil protections? never to the "salvation of the soul." Within that assumption, Locke suggests that God gave no extra-ordinary powers to a civil magistrate which would allow him to coerce another to his religion. A civil magistrate can also not have any power of inward persuasion, only outward force and earthly penalty. We cannot just believe what we are told but rather what we truly believe (I italicize because this is a central point in Locke's conception of faith discusses at the end of the post). And also, a state imposing on religious affairs could not in the end help save your soul, only confuse the nature of its origins. You would owe what you praise in faith more to your country than to your maker (the issue becomes convoluted).

But even with all of these considerations, the state may afford protection to a religion. A good law would protect the members of a congregation of their rights. But also, a state should not tolerate a church which if there is some alternate allegiance (like Catholicism and "popery"). It is on this point that memester quotes from Locke. Essentially, what is being said is that not only Catholics, who hold a spiritual allegiance and an allegiance of state, but also to atheists, are to be considered entirely untrustworthy because state and religion should be separate as to potential conflicting interests.

But toleration is the dynamic force here. Should non conformists be denied toleration? Not in this case, because it is not in their nature but in their lack of toleration themselves. Locke says it himself that religion is not what inspires them, but suffering and oppression. What of multiple denomination toleration? Locke is somewhat accepting of this because his conception of the church is such that it is essentially a composite of worshippers and all come together for the purpose of the salvation of their souls.

Unlike a state whose laws are made to govern a people, the people are in turn the authority that make the church. Churches, Locke suggest, don't need authority figures like Bishops. Since God resides whenever two or three people come together to praise him, then that is the authority of faith and religion. And that sorta gives you a more definite definition of faith and religion according to Locke though, doesn't it? Locke's modus so far suggests that not like the state or any other entity which forces the salvation of the soul, salvation is found within the soul of every man. The power of church lies with the people. But this does not mean that a person can be solitary and worship god alone though. There has to be a communal spirit. And also, as far as Locke on faith, though it should not be influenced by outside factors such as the state, there is a only a "narrow way to salvation." With these two points in mind, one must above all else be convinced in one's own mind of the attributions of salvation (one cannot simply be told what to believe? what I italicized earlier).

Yes, when reading it, I did notice that glaring intolerance for atheism in his call for tolerance. :Glasses:

That's unfair don't you think? One can't really judge historical figures too harshly by present day standards. Unless you are willing to judge yourself by futuristic standards.

I think the tomb-stone on every generation could be: "Sorry... we did the best we could."

but of course, I certainly am !

People in the future will judge people of today by their own standards. And in this case, there were atheists and theists who did not share Locke's prejudices in Locke's day, though perhaps not very many. But blindly going along with mainstream prejudices is never a virtue, in any age.

But we have a mainstream prejudice against the past.

You might have a prejudice against the past, but not everyone does. Some even glorify portions of the past as a "golden age". I myself see nothing inherently good about something being either new or old. In fact, I would go so far as to say that it is downright silly to judge something as good or bad based upon whether it is old or new.