MIT KHAQAN, Egypt, Oct 10 (Tom Perry/Reuters) - When they left their village north of Cairo on Aug. 27, Ahmed Waguih and Bahaa Zaqzouq told their families they were going on holiday. A few weeks later and hundreds of miles away, the cousins were killed mounting a cross-border raid into Israel.

Bahaa, 26, had for years spoken of his wish to die a martyr. But Ahmed loved life, recalled his father, Waguih Ibrahim who is struggling to comprehend how the mild-mannered 28-year-old abandoned his two infant daughters and wife for a suicide mission at the distant Sinai border.

I just don't understand this fundamental, quick transformation, he said during an interview at the family home in Mit Khaqan, a hamlet in the Nile Delta. Who transformed this young man and led him to this?

The role of these two young men in the Sept. 21 attack shows that militant groups that have flourished in Sinai since Hosni Mubarak was toppled are drawing in recruits from well beyond the desert peninsula, suggesting their ideas are appealing to a wider - if still limited - audience.

As the state that is now led by Islamists tries to crush the armed groups in Sinai, the incident hints at the broader ideological challenge they face confronting militancy in Egypt, where such ideas have long existed but now flow more freely than under Mubarak, who reined in Islamists of all stripes.

This kind of religious market is really flourishing now, said Khalil al-Anani, an expert on Islamist movements based at Durham University in England. He listed schools from the al Qaeda-inspired Sinai militants to the Muslim Brotherhood, the group that propelled President Mohamed Mursi to office.

If you don't strengthen the moderate mainstream, I am afraid the extremists will increase. This will be a very significant challenge for the Brotherhood.

The mountainous desert terrain of Sinai is a world removed from the lush farm land surrounding Mit Khaqan, the sleepy hamlet where Ahmed and Bahaa were raised. Just how the pair ended up in Sinai is a mystery to the people who knew them.

Of the two, Bahaa had shown more signs of fundamentalism. Neighbors remember how as a child he had preferred prayer to play, though say he never tried to force his ideas on anyone. He always seemed comfortably off, apparently thanks to an inheritance left by his father who died when he was a child.

Before leaving, he shaved his beard.

I asked him why. He laughed and said: 'Pray that God will see me through.' That was the last I saw of him, said Rami Ali, one of his neighbors.

Ahmed had never spent a night away from home until the day he left the village, making sure he could not be contacted by leaving his mobile phone behind.

Ahmed never spoke about politics. He never spoke about the Palestinian issue. He bought a lute and took music lessons, though fundamentalists say music is forbidden, said his father, Ibrahim, as one of his two other sons displayed photos of Ahmed, smiling and clean-shaven, on a laptop.

Ahmed had earned a respectable living fixing household goods in a workshop beneath his house. Raised by his father with a moderate understanding of Islam, he had also made a name for himself as a singer of religious songs.

A DANGER TO EGYPT

A Sinai-based group called Ansar Bayt al-Maqdes claimed responsibility for the attack in which an Israeli soldier was killed. A third militant who took part in the attack was also killed, but there has been no word on his identity. The three were well armed and had explosive belts, the Israeli army said.

The villagers learnt of their fate when an Egyptian TV station showed photos of the attackers' bodies, which had not been identified until then. Their families collected them from a morgue in Ismailia on Sept. 30, following investigations by the military prosecutor, and buried them the same day in Mit Khaqan.

They are being remembered as martyrs in the village - a status that reflects popular antipathy towards Israel more than three decades after it made peace with Egypt.

The Mursi administration has assured Israel that the peace treaty signed in 1979 by President Anwar Sadat - who was later assassinated by Islamist gunmen - is safe. But Mursi has also kept the Israeli government at arm's length, and avoids referring to Israel by name in public remarks.

Efforts to curb the militancy in Sinai have been stepped up since an Aug. 5 attack by militants who killed 16 Egyptian border guards, seized an armored vehicle and used it to break through the border in another attack Israel. The perpetrators of that attack have yet to be identified.

The majority of Salafi Jihadi groups now focus on Israel, said Anani of Durham University. You can find people from everywhere in Egypt and even people from outside Egypt: Saudis, Libyans.

Residents of Sheikh Zuweid, near the border with Israel, reported seeing numerous people from out of town ahead of the Aug. 5 attack.

The Nour Party, an ultraorthodox Salafi group that is part of the political mainstream, has been sending preachers to Sinai in an effort to combat militant concepts such as takfir - which allows one Muslim to declare another an infidel.

Yousri Hamed, a Nour Party spokesman, said such ideas were limited and was dismissive of their existence beyond Sinai. They might be individuals who do not work in the open because they cannot confront society. You don't notice them unless they gather in a place and begin practicing deviant ideas.

Nageh Ibrahim, another Islamist preacher, believes militant ideas have spread widely since Mubarak was ousted.

He has warned of the scope for attacks in Cairo itself once the government manages to get a grip on Sinai and chokes the passage of militants seeking to strike Israel.

Ibrahim was one of the founders of al-Gama'a al-Islamiya - a once armed group that renounced violence over decade ago. He is advocating intense efforts to fight militant ideologies.

These ideas are present in all of Egypt, he said in a telephone interview. I confront these ideas because I believe they are contrary to the interests of the nation and Islamic civilization.