Islam prohibits neither images of Muhammad nor jokes about religion
That's the theme of an editorial by Amir Taheri in today's WSJ online. I urge you to go and read it all, as it offers some interesting insight on the demonstration organizers and their divergence with the principles of Islam - but here's a sample:
"But how representative of Islam are all those demonstrators? The "rage machine" was set in motion when the Muslim Brotherhood--a political, not a religious, organization--called on sympathizers in the Middle East and Europe to take the field. A fatwa was issued by Yussuf al-Qaradawi, a Brotherhood sheikh with his own program on al-Jazeera. Not to be left behind, the Brotherhood's rivals, Hizb al-Tahrir al-Islami (Islamic Liberation Party) and the Movement of the Exiles (Ghuraba), joined the fray. Believing that there might be something in it for themselves, the Syrian Baathist leaders abandoned their party's 60-year-old secular pretensions and organized attacks on the Danish and Norwegian embassies in Damascus and Beirut."

