There is one issue here that has been overlooked: the British (or any other nation) cannot let another nation, for any reason, forge its passports and expect not to be reprimanded for it.

This. I believe, has little to do with anti-Semitism or appeasing the native Islamic community, it has to do with propriety, sovereignity and diplomatic documents, which belong to the Queen, and the British are rather sticklers for that at times.