One thing I've noticed about blasphemic art—by which everyone usually means: art that blasphemes Christianity—is that nearly all of it has been created by Catholics. (I don't know Kippenberger's religion, but he comes from a Catholic region of Germany.) This has to be factored into the debate about artworks that offend non-Christian religions, most of which originate from outside the faith. I seldom see Jewish, Muslim, or even Protestant artists deliberately violating their religion for shock effect, though they may run afoul of it anyway, as Rushdie did. Catholics seem to be driven to great lengths to exorcise their religion.
Second, defenders of blasphemic art seem to assume that taking offense to an artwork leads inevitably to advocating censorship, and therefore we should never take offense to even the most provocative imagery. Personally, I don't want to live in a world where art is regarded with such rational detachment that it has lost its power to shock—that's one (though only one) of its possibilities. The artist has a right to offend people, and people have a right to be offended.
Third, a work like this one by Kippenberger has almost no aesthetic impact—its effect is entirely psychological. Because we grant the image of the crucifixion a certain power, Kippenberger can exploit that emotional reservoir of feeling, but he doesn't add anything to it, in the way that, say, Michelangelo's Pietà invests a tremendous power into the image of Mary and Christ, for example. In a world filled with blasphemic art, Kippenberger's image would have no effect at all, whereas the Pietà still would.
In this, it's of an entirely different order from Andres Serrano's once-controversial "Piss Christ," which remains in my opinion a visually stunning and philosophically troubling work of art. It's even been defended by art critic/nun Sister Wendy Beckett!