Just finished listening to an interview with David VanDrunen, a "Radical Two Kingdoms" guy.
Synopsis of the debate
Luther is the touchstone for Two Kingdoms thought. The civil state should not meddle with church affairs nor should the church meddle in civil affairs. The church should not require members to hold specific political views, for instance. Against this is the view that Christ has one kingdom, and wants His Church to bring the Word of God to bear in the public square as much as anywhere else. Public policy should be shaped by Scripture, not just natural law.
This is similar to the separation of church and state discussion in the first amendment. We want to keep the state from interfering with the free exercise of religion, but a misunderstood strict separation has led to exactly that interference. Similarly, if you strictly define and separate the two theological kingdoms of church and state, you wind up with a church not able to speak God's Word to the magistrate. R2K guys discourage pastors from protesting at abortion clinics, as an example. Why? To not give the impression that church members MUST do this or face ire or slight from the church. But this is a baseless fear. Few in the church have a guilty conscience because of what their pastor does or doesn't do, to begin with. And the power of example for cultural engagement is more important than a concern for the perception of what you "have to do at this church." What about pastors writing letters to the editor of local newspapers? This strict separation silences the church's voice right where it might be most effective.
Where to land
There's a middle way between this strict separation of the R2K view and the Christian Reconstruction view that says every civil government must adopt the Old Testament penal code. I'm for Kuyper's sphere sovereignty, and the church advocating in the political sphere for the general equity of God's moral law.