Fortunately, once the games kicked off people forgot about the logo and it was a very successful event by all accounts and there was a huge buzz in the air with everyone (I'm a Londoner). Still can't believe they paid that much money for that!
That one offended my design sensibilities before I knew enough to be offended in other ways. It looked like some sort of very-early-90s Nickelodeon thing. Then I saw a specially colored version and... yeah.
If you read vertically, turn some letters sideways, and apply liberal amounts of imagination, it looks like "Zion" which was enough to offend the Iranians.
