The most powerful commentary on this whole chain of events, I think, has been from Muslims; and I wish that people wouldn't talk about this sort of thing without making a serious attempt to see this matter from the Muslim point of view. My recommendations for blog-reading on the subject:
Sunni Sister has a very good post about a very common form of bigotry (I had noted briefly an example of this in discussing Daniel Dennett's odd essay in CHE recently):
My feeling is that by now, people who are really interested in knowing what the regular Mozzies of the mainstream think about terror have figured it out, and only those who are interested in stoking the flames of hate still say, "Why don’t they condemn terrorism?" every time a Muslim dares to raise his or her head. Because anyone with access to a television, newspaper, or the internet can take a moment or two to find out that Muslim community leaders, including those of our big organizations, spend a great deal of time telling the press that we’re against violence, terror, etc. everytime some Muslim somewhere does something wrong. It’s getting to the point where some guy named Abdullah mugs an old lady, and someone’s going to call the masjid and ask for the imam’s response, and some right wing nutter’s going to blog a post asking, "Why haven’t all the Muslims condemned this mugging?"(HT: Dervish)
Abu Sinan has a few very brief posts on the issue that are worth reading: here, here, and here.
Qadeeb al-Ban at Mere Islam has a set of links to try to help others see why some Muslims are so angry over this matter. See also the post, An Idiot's Guide to Offensive Cartoons.
Sister Aishah's Islamic Journey discusses the lessons of the story behind the Prayer of Taif in light of current events.
In addition, see Bookish on the subject (HT: Akram's Razor). (Unfortunately there's a pop-up from something on the page.)
[UPDATE: This defense of the cartoons at the Washington Post seems to me to miss the point entirely; it would be irrational, for instance, to commission cartoons using Shylock stereotypes and blood libel to test how afraid the media is of Jews; it doesn't become more rational when similar stereotypes and calumnies are applied to Muslims. It also, like a number of others in this controversy, fails to remember what 'freedom of press' and 'free speech' actually mean, namely, freedom from government coercion. They are not what is primarily at stake here; what is primarily at stake here is bigotry that casts aspersions with a broad brush.]