I've heard this several times, and what I'd like to know is:
What in the hell did you expect him to say - "Kill the Muslims!!"?
Good grief!
People really need to get off GWB's case about this. He said what he had to say. If you really think the President believes that Islam represents peace, you don't understand the man even a little bit.
Consider the consequences of him saying anything but what he's said. Look no further than the reaction to Falwell's recent remarks (all 100% truthful) for an example.
Now magnify that reaction x1000. That's what happens if Bush speaks the truth about Islam.
He could have said anything, he did not even have to mention Islam.
But claiming that Islam is a religion of peace is just shows how misinformed most Americans are.