Maybe back then they saw it as others have seen it... a picture depicting others set to be impaled. Maybe they couldn't afford underwear! You're gonna begrudge them a proper impalement cause they can't afford UNDIES?? All joking aside, it was 1927 when this was printed and homosexuality wasn't as "mainstream" (for lack of a better word!) as it is now. Perhaps they didn't see it as homoerotic. Also, consider the context this picture was used in. I don't like the WBTS any more than the next apostate. However, I'm not quick to ascribe bad motive to every SINGLE thing they do. I give the benefit of the doubt to everyone... (perhaps that's why my ex has screwed me so many times lol).
I don't consider it offensive, blasphemous, or any of the other words that were used. This VERY WELL could have really happened at crucifictions of the time. Keep in mind, too that nudity isn't frowned on in non-puritanical cultures. A wang is a wang and who gives a shit if it's hangin out getting some air? Honestly, if a person reads more into this than just that it's a simple piece of art, THEY are the perverts with the problem.