It's a retarded decision, The "Islamphobic" image was from Rashid al-Din's Jami' al-tawarikh, NOTHING WRONG with showing the image
I feel bad for how this incident will no doubt be used to claim Muslim students are only ever crying wolf on Islamophobia.
Overwhelming majority of Muslims object to showing images that depict Prophet Muhammad (peace and blessings of Allah be upon him). So the views of a small fringe groups including you shouldn't matter.