I can't give you a complete answer to this question in this posting, but I think it's an important question to be raised. Since Glenn Beck, who is himself a Mormon (and perhaps not the best informed one at that) and not a trained theologian (his post HS education consists of one religion class at Yale), has declared that Barack Obama is captive to "liberation theology," which is all about "victims/oppressors" and condemned by the Pope, "liberation theology" is back in the news.
I think it's important to note that there is not just one liberation theology. There are many -- Latin-American, Black, Feminist, Asian, Palestinian, and more. Aspects of liberation theology have always been with us, throughout history, for it is a theology that seeks to transform the world. This is something that those in power do not like. It is interesting that the Pope's condemnation of this theology has been brought into the discussion, for the reason why John Paul II and his successor have condemned this theology is because it challenges their power. It includes a call for the church to be returned to the people. Luther also got into trouble with the Pope over this issue -- of course, when the Peasants rose up against their oppressors, Luther sided with the authorities and supported the slaughter of people who thought he was on their side. But all of this is simply a way to get us to a definition (and those can be many).
I simply want to start the discussion by turning to Gustavo Gutierrez, a Peruvian Catholic Theologian, whose book A Theology of Liberation, is considered to be the classic statement on liberation theology. The quotation I'm about to give comes from 1973 edition.
It is for all these reasons that the theology of liberation offers us not so much a new theme for reflection as a new way to do theology. Theology as a critical reflection on historical praxis is a liberating theology, a theology of the liberating transformation of mankind and also therefore that part of mankind--gathered into ecclesia -- which openly confesses Christ. This is a theology which does not stop with reflecting on the world, but rather tries to be part of the process through which the world is transformed. It is a theology which is open -- in the protest against trampled human dignity, in the struggle against the plunder of the vast majority of people, in liberating love, and in the building of a new, just, and fraternal society -- to the gift of the Kingdom of God. (p. 15)
Glen Beck says that Jesus just came to save our souls, nothing more, nothing less. That may be the message of the Book of Mormon (I've not read it, so I don't know), but its not the message of the Gospel. Jesus consistently talks about living a new way of life that transforms the world in which we live. Evangelism is more than simply rescuing the perishing, it is offering a vision of a new way of living, which Jesus calls the Kingdom of God. Liberation Theology was born in Latin America out of frustration with a church that turned a blind eye to the abuses perpetrated against the people by dictatorships and a small cadre of wealthy land owners. When Archbishop Oscar Romero of El Salvador realized what was happening to his people, he woke up to his responsibility and began to speak in opposition. As a result, death squads aligned with the government (a US supported government) murdered him as he said Mass. This is what Liberation Theology is all about. It involves speaking up for those who are voiceless, with a view to a new world of peace and justice. It is a theology more focused on "orthopraxis" (right living/practice) than "orthodoxy" (right doctrine). Indeed, I do believe that at its heart is the dictum -- love God and love your neighbor.