Well, I'm sure you've heard about it, but Newsweek managed to perform chiropodial surgery via firearms on its Koran story. Here's some of my thoughts on the whole issue...
First, as I said, the media is biased - biased towards bad reporting, in this case as shown by the urge, need, addiction to be first with a hot story. This led them to base a story on one source, and several non-denials. This can cut two ways, of course - if you expect a government official to comment on every single portion of a story in confirmation/denial, well, you're gonna be there a while. On the other hand, people were asked about the Koran portion of the story, and didn't comment, which was should have been reflected in the Periscope item. A "no comment" isn't nearly as good as a yes, but it isn't a no either. Still and all, shoddy reporting.
However, the recent rush to blame the rioting wholly and completely on the Newsweek article is wrong - Dick Meyers himself said so in reference to the riots at Jalalabad. I'm willing to bet that some riots are due to this report, but not all. Of course, that doesn't stop McCllelan from blaming them, and several other bloggers have started the "Newsweek lied, people died" meme. Thus showing that trite sayings are exempt from the 'imitation is the sincerest form of flattery' adage.
As Andrew Sullivan says - and I agree - thanks to our actions at Abu Gharib, Gitmo, and outsourcing prisoners to countries that torture so we can piously proclaim we don't do it (which always reminds me of the offense taken when a drug dealer was arrested and asked how many drugs he had taken that morning - "Dude, I just sell it, I don't use it!") the reports of Koranic abuse aren't completely outside the realm of possibility here.
Also, don't forget so far there has been no official denial from the Pentagon itself. One report wasn't looking at that allegation, and others claims have been found "not credible." I seem to recall Abu Gharib was, at one point, "not credible", so pardon me if I don't find this a ringing declaration of innocence. Many detainees have claimed this happened, so Newsweek didn't exactly just pull this story from its rear end.
And finally, I think Newsweek can cut the Bush Admin's protests off at the knees by admitting their source was a man named "Curveball".