If this is true, and I see no reason why it wouldn't be, I really have to question Random House's judgment.
The story: woman writes book about Ayesha, favored wife of the Prophet Muhammad. Book sent to Islamic expert, who predicts widespread offense taken in Muslim world. Random House then decided to pull the book, fearing that it would "become another 'Satanic Verses'" - a reference to the Salman Rushdie book that got a price put on the author's head by the idiots running Iran. (I've read it - and I have no idea what the ayatollahs were bellyaching about. Beside the point.)
Anyway, if you're Random House, wouldn't you be friggin' ecstatic at the idea of another "Satanic Verses"? I mean, what better publicity for a book could you have than CNN reporting on a bunch of schmucks in Saudi Arabia burning it? You can practically smell the money rolling in. Why would you turn that down? It's a slam dunk, and not in the George Tenet sense either!
Random House shareholders, keep this in mind. Some executive doesn't want your company to make money.
Update: "Satanic Verses" was the #6 bestseller in America in 1989. This is a list usually dominated by the likes of Stephen King and Danielle Steel - to my knowledge, Rushdie never had a book up there before and hasn't had one since. I say again, why wouldn't you want to publish this book? Even if it sucks, the controversy makes it a cash cow!