In regards to the issues currently happening in Egypt and Libya, the problem is intolerance. The proper response to Mr. Bacile and his movie is to ignore it and his childish attempt at attention grabbing. If pressed, criticize it as bigoted, amateurish and hateful. Disagree with it to your heart's content. But to commit violence of any level over the impotent ramblings of a buffoon? Absolutely unacceptable.
Freedom of speech means nothing if it cannot be used to criticize and lampoon those in power -- whether they be people, icons, symbols or beliefs. Freedom of speech that is limited to saying only the bland and inconsequential, never arousing passion or challenging authority is no freedom at all.
There is no such thing as a right to not be offended.