I don't buy it. People don't criticize a king at all. You don't criticize the communist party in Stalinist Russia, tactfully or otherwise. Doing that gets you sent to the gulag.
The reason people say that it was a probably a mistake is that it was probably a mistake. There is no apparent malicious objective for Google to stop taking this company's money.
There are really only two plausible causes for this. The first is some bureaucratic red tape within Google, where some employee made a poor decision and no one has corrected it yet. The second is that this isn't Google at all, it's the government putting pressure on Google to stop doing business with certain types of companies, and then it's Google being beholden to the government and having to do its bidding.
And I have to say the second one is a lot more plausible. Google has every incentive to take an advertiser's money. They're a publicly traded company. They have an obligation to the shareholders. Turning down paying customers because of some moral objection to pointy objects is a little bit crazy. Turning down paying customers because otherwise the government is going to start harassing you is a lot more rational.
Of course, it could actually be both. Congress is fond of passing laws against doing business with "criminals" or "terrorist organizations" or whoever may be found wearing an Anti-Flag shirt, and lawyers are fond of the phrase "out of an abundance of caution." Put the two together and you get a de jure ban on certain things and a de facto ban on anything that might be sold in the same showcase as those things. And if you don't like that then you might want to stop voting for Congress critters who support the Patriot Act.