What the Pope actually said, if you're interested, is linked here. The inclusion of the controversial quotation is intended to be provocative and to draw the listener in to the talk. The talk doesn't refute the observation, but uses it as a basis upon which to frame the irrationality of the God of Islam, in contrast to the rational God of Christianity. If he knew this statement would be read by Muslims, he would have known that it would have angered them.

In a way, it speaks to the fundamental philosophical perspective that fuels Al'Queda. Al'Queda beleives that the flaw inherent in western society is the bifurcation between science and religion. They see Islam as a religion in which rational scientific pursuits exist in complete harmony with God. Here, the Pope strikes at that bifurcation while bringing a counter accusation to fundamentalist Islam.

The primary purpose of the essay is a manifesto for the academic study of religion, which is assailed on the basis that it is not empirical. I might agree with the Pope, that questions of philosophy and ethics might have right and wrong answers, and while these questions cannot be effectively assessed by empirical means with today's techniques, that these answers might be found through intellectual observation and analysis, and religion is certainly one of the ways in which these matters are explored, and as such is a valid academic pursuit.

The problem here is two fold. First, the Pope wishes, as Christians often do, to argue that Religion is a prerequist to ethics. I think that good ethics makes sense systemically, and encouraging systemic good doesn't require a God standing over your shoulder. Furthermore, religious people seek to do more than to assess questions of philosophy. They ask people to accept matters of fact about the physical word that are not merely unsupported by empherical evidence, but directly undermined by it. Having said that, I think the Vatican has been distancing itself from that sort of thing lately.

The intention here is not one of retrenchment or negative criticism, but of broadening our concept of reason and its application. While we rejoice in the new possibilities open to humanity, we also see the dangers arising from these possibilities and we must ask ourselves how we can overcome them. We will succeed in doing so only if reason and faith come together in a new way, if we overcome the self-imposed limitation of reason to the empirically verifiable, and if we once more disclose its vast horizons.

I wonder if physicists are going to start burning stuff in the street?