Well, I haven't seen that picture so I really have no idea just how offensive it was.
Anyway, I'm not a religious person, and usually I have absolutely no problem with religions being ridiculed. Only problem would be if the joke also incouraged violence towards members of that religion.
The problem is that I just can't understand how some people can take religion that seriously. That they would consider it above the lifes of other humans, including their loved ones. I personally don't view religion as more sacred than so many other things.
But does my own and other people's views on religion justify making fun of it? Not any more than making fun other all kinds of other things IMO. Nothing will ever be free from being the target of jokes however, so I'd say that it's important to learn to deal with such things. That goes for both sides.
I think that people should make their choice about who and what to make fun of, based on their own sense of morals and out of their respect for the target. They shouldn't base their choice on fear of death threats or worse. That was the reason behind the Muhammed cartoons.
If the joke is against the law, it shouldn't be dealt with accordingly. Violence, especially aginst innocent people, isn't the right answer to it.
Also, I'd say that just because you make fun of something, doesn't necessarily mean that you don't respect it.