That passage as well as the 2nd Commandment refers to idolatry. The worshipping of graven images. It is indeed a reference to the religious practices of the Gentiles which included such foul practices as temple prostitution and gay sex.
“Because that, when they knew God, they glorified him not as God, neither were thankful; but became vain in their imaginations, and their foolish heart was darkened.
22Professing themselves to be wise, they became fools,
23And changed the glory of the uncorruptible God into an image made like to corruptible man, and to birds, and fourfooted beasts, and creeping things.
24Wherefore God also gave them up to uncleanness through the lusts of their own hearts, to dishonour their own bodies between themselves:
25Who changed the truth of God into a lie, and worshipped and served the creature more than the Creator, who is blessed for ever. Amen.
Despite having the Truth of God revealed to them, they turned away from God and made graven images which they said were truly God or gods take your pick and worshipped those images. Paul, in case you have forgotten was outlining how man had fallen away from God and proclaiming that Christ died for us.
There is nothing in that chapter of Romans to suggest that the making of an image (as in art) in and of itself is forbidden.
The intense and vitriolic defense of Catholic statues and images is telling.