OK, back again after some sleep

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There are few issues here, both issues of fact and issues of opinions. On the fact side, there has been some misunderstanding on what was published. The paper had 12 images of the prophet Muhammad, if such things don't offend you you can see them here:
http://michellemalkin.com/archives/004413.htm . There were also three images that were being distributed by Danish Islamic groups that were far far more inflammatory, including very dark sexual imagery and use of Pig imagery that was clearly designed to enrage Muslim. These images were never published in Denmark, despite news sources such as the BBC thinking they had been and publishing one of them. It seems the people distributing these very nasty images were making a range of outrageous claims - from saying the Danish Queen said she hated Muslims, to having a support base of 200,000 Danish muslims (rather than 15,000). I found out about all this over the last _months_ that this has been going on because i share an apartment with a Danish guy, so i got to hear the on going coverage in the Danish press as well as the recent resurgence of feeling on this issue and the republishing in France. If you look at the images that _were_ published, while edgy they are also make fun of themselves: one image is of a muslim boy in front of a blackboard where he has written "Jyllands-Posten's [the paper's] journalists are a bunch of reactionary provocateurs".
Its also important to understand something about Danish culture here. While in general one might say the nordic countries are very politically correct, the Danes are PC in an odd way. For instance, one of their most popular TV shows (as i hear) stars Dolph, a fascist hippo (man in a life size blue hippo suit) who believes the only true men in Europe are ones like Jean-Claude Van Damme, and the Berlucsoni would be perfect is he wasn't such a lazy southern European (and I've toned down those statements a bit for the board). In general, I have got the impression that Danish humor can be fairly non-PC because on some level its well understood that people are open minded and not bigoted. It took me a while though, and when my flatmate described some of Danish kids TV the first time i was fairly shocked, some of that stuff would have to be on at 1am in the UK if at all (for any Danes, the christmas show about the fisherman in Copenhagen and his son was what got me).
On the issues of perception and offense things get more complicated. Mikuro in some ways I do agree with you, we don't see so much 'outsider' criticism of Christianity, but thats because I live in western europe, a fairly christian-dominated area so its not exactly outsider, but for strong anti-chritian messages how about South Park (the devil and Saddam Hussein in a relationship, God is a strange animal thing who is best friends with the Budha) or the Kevin Smith film Dogma? On the other hand i don't think we should limit freedom of expression, and i think thats why these cartoons were published, to highlight how sensitive we have become of criticizing Islam, rather than just being published _in order_ to criticize Islam. Granted they did not have that effect, and the editors have expressed their regret for that, but this not mean they should be strung up, or Danish people threatened by Hamas etc. I don't feel able to come down too strongly on either side, but I do feel strongly that the kind of sentiments you guys have expressed come from a limited, over-PC-influenced view of the situation.
If you want to get theoretical about this, i would say it highlighted the modern failure of multiculturalism as a sociopolitical position, something i've seen widely discussed. This failure could be summarized as the fact that being tolerant of other cultures in a country is of course positive, but that we have exercised tolerance in a way that has actually led to ghettoisation by not encouraging integration between different cultures. I've seen this extensively in the UK, from separation of cultures (and here Islam is unusual as the religion and culture seem so intertwined by western standards) based on economic status leading to separation along racial lines in a way which made people feel deeply resentful. I also had a very interesting discussion with a French woman, of admittedly right wing economic views, on the recent riots in France. She claimed that these riots, which seemed to be going along racial lines in some way, showed a real problem in French culture. She felt that earlier generations of immigrants to France who had been invite din to work had been better integrated, but that the second generation children of these immigrants found themselves in poverty and a racial minority, and that when the police stop to check your ID on every block its hard to not feel separated from society.
Ok, I wandered a bit off track their but it does relate here. These images, in my opinion anyway, were _not_ incitement. Edgy yes, perhaps inadvisable, but not meant to lead to racial or religious persecution. For that you can go to north london and find within not many meters Islamic people spouting fire and brimstone and death to the west, and British people (from the british national party) calling for racial purity of Britain (forgetting we are all a mix of romans, celts, saxons, vikings, normans etc etc). Both are reprehensible, but i don't feel this is the same situation. I also wonder why these cartoons, which were published in _september_ last year, were only causing the uproar now,and why the French paper chose to reprint them (I am less sure if their motives are real discussion or shifting more papers).
Urgh, enough for now or I'll be at this all day. I really don't want to offend anyone, i would just encourage looking at the situation in context and with as much information as possible, rather than to some extent being affected by a version of the media hyping that people are accusing the Danes, or rather this one paper, are doing.
[edit] Zammy you posted while i was composing this almost endless post

. I agree with you, i can't say for certain if this situation has been used to support certain positions, but i think its a very valid question.