If you listen to his character their is nothing about any religion in particular. Google "Ali G Muslim" and you will read many opinions of Muslims who DO THINK he is a parody of Muslims in the UK....perception is everything. I am glad they are not offended and no Fatwah was issued against Cohen. The whole Ali character is not about a race, religion or any stereotype, but a parody on how the interviewees react to this character's subject matter during his interviews and antics.
Palestinian youths throw stones at security forces in Shoafat, E. Jerusalem; none injured (Haaretz)
from the article: Report: Sacha Baron Cohen to retire alter-egos Borat and Ali G