PD,
Maybe CC wussed out and maybe not. I personally think this was intended to be a swipe at CC and their recent decisions not to rerun some of last season's episodes. I don't think Trey and Matt even animated Mo for this episode. (I could easily be wrong though. We'll see if CC responds on Thursday.)
I will note though that I've been watching the syndicated episodes of SP lately, and the edits in syndication look exactly like the Mohammed edit did. (i.e. text on a black background describing what is going on, as in "Cartman is crapping out of his mouth.") This leads me to suspect that it might be a slam against the syndication edits as well, but that's just a gut feeling.
A lot of you seem to think that Matt and Trey never intended to show Mohammed. I believe they did. During the Mohammed scene, the screen said "Comedy Central has refused to broadcast an image of Mohammed on their network".
Matt and Trey are capable of many things - but libelling their own network is probably not one of them.
Here is my letter to Comedy Central:
How nice to see that Comedy Central refuses to show an inoffensive image of Mohammed, but did allow Crap all over Jesus and the American flag. Of course, I believe in free speech - my problem is not what was shown, but what was censored. Our country is at war with terrorists, and you have picked the wrong side. I hope your censorship of South Park somehow violates your contract so that Matt and Trey can get out of it and find a network with principles.
...and since CC just told National Review that they did indeed pull the image, it looks like I was wrong. Mea culpa.