I agree with your views on the Arab world but that's irrelevant to the discussion here?
Should it be illegal to burn religious books for the sole purpose of inciting hated freedom of speech? Probably not, but there needs to be some measure against people who are doing stuff like that purely for that reaction.
It turned the relatively peaceful streets of Finland into one with anger and violence, because one guy wanted to make a point. People were happy to let it happen until people from the opposite camp started burning Torahs. Suddenly it became an actionable issue.
Regardless of your views on the Arab world (of which I again, agree), a law that protects some and condemns others is the fastest path to instability and chaos and must be avoided at all costs. That's what's being discussed here.
I don't have an answer. I don't think it should be illegal, but I do think freedom of speech needs to have limits.