How do Protestants view the prophecy and birth of Jesus The prophecy
Isaiah 7:14 (NIV)

Therefore the Lord himself will give you a sign: The virgin will conceive and give birth to a son, and will call him Immanuel.

The fulfilment of the prophecy
Matthew 1:20-23 (NIV)

20 But after he had considered this, an angel of the Lord appeared to him in a dream and said, “Joseph son of David, do not be afraid to take Mary home as your wife, because what is conceived in her is from the Holy Spirit.
21 She will give birth to a son, and you are to give him the name Jesus, because he will save his people from their sins.”
22 All this took place to fulfill what the Lord had said through the prophet:
23 “The virgin will conceive and give birth to a son, and they will call him Immanuel” (which means “God with us”).

There is some controversy surrounding these passages where Jewish and some Christian faiths believe that the virgin in Isaiah 7:14 may not be a virgin, and not only that, but she names her son.
Isaiah 7:14 (RSV)

Therefore the Lord himself will give you a sign. Behold, a young woman shall conceive and bear a son, and shall call his name Imman′u-el.

Interestingly, the RSV quotes Isaiah 7:14 in Matthew 1:23 to say

Behold, a virgin shall conceive and bear a son, and his name shall be called Emman′u-el

How does the Protestant faith view these passages?  Was Jesus' birth foretold in Isaiah 7:14?
Speaking as a Protestant:

One of the core tenants of our faith is Sola Scriptura. As it says in the scripture:

2 Peter 1:19-21


  We have also a more sure word of prophecy; whereunto ye do well that ye
  take heed, as unto a light that shineth in a dark place, until the day dawn,
  and the day star arise in your hearts: Knowing this first, that no prophecy of the scripture is of any private interpretation. For the prophecy came not in old time by the will of man: but holy men of God spake as they were moved by the Holy Ghost.


Peter here is saying that the scriptures are more sure, more trustworthy, than the voice of God booming directly from heaven (see the passages context). Moreover, he states that scripture has no private interpretation; in which he communicates that God Himself wrote the scriptures with a specific intended meaning in mind. This principle declares that there is an absolute truth, and only one correct understanding of the scriptures.

While this principle has been largely lost sight of, the application of this principle to the matter at hand becomes quite easy to understand. Matthew, under inspiration of the Holy Spirit, applies the prophecy of Isaiah 7 to Jesus' birth; and so it is not Matthew, but God rather who is divinely interpreting His own prophecy for us through His servant.