A revealing post on the Muhammad teddy bear story:
The teacher worked at a fee-paying school attended by wealthy Sudanese, and in September - two months ago! - invited the infant-school children to vote on a name for a class teddy bear. The children voted on Muhammad, which just happens to be the name of the most popular boy in the school.
I'm no Islamic scholar, but having read the relevant sections in a translation of Qadi Iyaad al-Yahsubi's famous text Al-Shifaa' and heard other scholars talk about the rulings on this matter, particularly in regard to offensive writings attributed to certain Indian Islamic scholars of the late 19th and early 20th centuries, it is obvious that this lady's actions do not constitute an insult.
Now the lovely reminder:
For someone to be punished for an insult, it has to be intended, even if not premeditated.
The author, by the way, lives in the West.