I thought I heard he made that remark some years ago. In any case it was kind of insulting, but then the Italian military has been the butt of jokes for a long time. I am Italian-American and don't want to be PC so I won't claim "victim" status here. But Kerry should know that some people are easily offended and making wisecracks about some ethnic groups is not a good idea. He already tried to kiss of the Polish-American vote by not including them as part of the US coalition.
The American military is trying to capture an island which is occupied by a single Italian soldier (perhaps in the South pacfic??). Wave after wave of US military power is hurled against the island, suffering 100% casualties. No one survives. Still, the lone Italian soldier remains in place. Finally, a massive attack by the Marines is thrown on to the beaches. From this attack, only 1 American survives to make it back to HQ. The Commander asks "What went wrong?" and the wounded marine says "There are two Italians on the the island!"
It's a dumb joke. But I just love the fact that this joke was (obviously) intended to tell the opposite story -- one American is a match for the entire Italian army. But it got twisted around, and was told to me as a joke about weak Americans. And I was so young, I just thought it was funny, even though I didn't really understand it.
When I got older, I learned about Ancient Rome, and the Renaissance. Not too many countries can measure up to the Italian achievements. For Kerry to make "an Italian joke" says a lot about his maturity.