A Matter of Opinion
It has been said that the pope does not agree with Manuel II’s statement which he had quoted in his speech. After reading the transcript of the whole speech (http://www.cwnews.com/news/viewstory.cfm?recnum=46474 ) it is unclear why he would use it if not to agree with it. He calls the emperor erudite and as far as I can tell is trying to make the point that the emperor was trying to make.
If he wanted to have a debate he has one now on his hands. If he wanted a dialogue then he is now further away from his goal than before the speech. If one begins with the approach that I am right and you are wrong then dialogue is dead on arrival. He painted Christianity as a religion where rational thought goes hand in hand with God and Islam as a religion where God is transcendent. Both are only subcultures. He obliquely makes the point that this is the reason for violence in Islam. There are certainly Christians who believe in the transcendence of God and Muslims who want to conjoin rationality with God. Why not bring up many of the incidents from Christianity to make the point that he was trying to make? Have not certain groups belonging to all religions at some point advocated violence? This is one of the central problems of religions: Each group apparently has a direct line to God and it seems he is telling them the so called truth while the other group’s line has been connected to the devil.
However, if the pope meant what he said then he should stick to it. That is his opinion and he is entitled to it. If people wish to oppose him then as long as they do it nonviolently it is their right to do so.
The colleague who mentioned, "there was something odd about our university: it had two faculties devoted to something that did not exist" appears to be more rational than the either side here.

Postscript: The media coverage on this issue was really bad. Everyone repeated the quote without actually making an attempt at explaining the context of the quote.