I think that, in their time, Sayyed Darwish, Abdel Wahab, Mohammad Al-Mougy, Baligh Hamdi, and many others were defining the avante garde in Arabic music.

As far as contemporary musicians, if you happen to Cairo you should definitely check out Abdo Dagher and Alfred Gamil. Abdo Dagher never made it to the mainstream, because the mainstream is after pop music and other “pollution” as you called it in a different comment. But among musicians and composers, Dagher is considered the most revolutionary composer and improviser in the modern period. Alfred Gamil’s compositions push the edges of tonality and lyricism and continuously explore new territory.

I’d be interested to know whom among the contemporary Arabic music makers you consider to be avantgarde. To me, an artist such as Fathy Salama is definitely in that category – having witnessed first-hand his music and his approach to composition. The Egyptian underground music scene is rich with experiments of fusion between traditional Arabic music and other musical traditions – similar to the adaptations that you mention during the early 20th century.