why should they? I don't think there's a ban in the Koran itself on misusing the prophet's name, but there's a strong cultural taboo, and she broke it. There is a ban in the Bible on taking the lord's name in vain - which would surely cover calling a teddy bear Jehovah - but just because Christians can't be bothered enforcing it is no reason why Muslims should do the same. In effect, you're suggesting 'moderate' Muslims are the ones who don't take their own religion seriously. Moderate Muslims ought to (and do) oppose terrorism; that doesn't mean they shrug off casual insults to their religion.
I feel sorry for the woman, especially as Mohammad is a common name for people there - but that doesn't make it a proper name for toys. As a teacher she should have been teaching the kids this, and explaining to them that it was not an appropriate name. She is after all living in a country where Islamists and animists are at war. She should have known better.