I would say that it’s an over simplification to say that the whole trend started after mushy’s enlightened moderation. The origins of both schools of thought is much older. In the past the ‘modern’ side was mostly confined to the well off in society who minded their own business most of the time as long as they were allowed to indulge in thier ‘modern’ activities.
As for the second school of thought, they were busy in other places and their direct impact on the ‘modern’ class wasn’t as much. The religious who want to wear their religion on their sleeves were always around and especially found state sponsorship in zia’s time. They were more of a nuisance for outsiders and minorities than the average pakistani and hence everyone let them be. After 911, these outside avenues to vent their frustration closed off. At this point, their presence started to impact the locals and the country as a whole. This is where the conflict started.
It definitely surfaced in mush’s time. Before that you wont see that much of youth in mosques and you wont see, girls and guys hanging out that much either.