Although the Wikimedia Foundation was earlier told the IWF would stick to its initial decision, today's statement shows them reconsidering the consequences of the blacklisting: the scheme employs a few transparent proxies, which effectively reduced most of the UK-originated Wikipedia traffic to a limited number of IP addresses. This in turn forced Wikipedia to protect itself from vandalism by revoking editing rights for those addresses.
Interestingly enough, the IWF decided to keep censoring the offending image if it's hosted in the UK:
Any further reported instances of this image which are hosted abroad, will not be added to the list. Any further reported instances of this image which are hosted in the UK will be assessed in line with IWF procedures.