My thoughts on the subject are complicated. To be honest I'm a big believer in free speech, and have defended things like sex and violence to an extreme degree. Albiet in most cases I am defending it in the context of pure fantasy, like the horror genere.
Recent political trends, and a desire to deal with real world incidents happening right now, have however caused me to reconsider this stance to an extent. Kudos to the game industry, it has managed to get one of the staunched defenders of free speech to reconsider his position, and not because they pushed the envelope in the direction they should have been.
To be entirely honest I don't think video games should be dealing with real world conflicts that are currently going on, at least not to the point that allows one to play the "bad guys" as defined by the US (more on this dual standard in a second). Playing as terrorists and anti-US insurgents, even labeled "Opposing Force", or using a game to do what amounts to pass gang propaganda is a problem. Things like "Grand Theft Auto" and "Saint's Row" haven't been a problem because everything is not only exagerrated beyond belief, but it's pure fiction, none of these cities, gangs, or incidents actually exist in the real world. On the other hand the drug wars in Juarez is real, and a game like this is tantamount to how gangs distribute propaganda in real life, they are more advanced than a lot of people think. Gangs like The Latin Kings and The Aryan Brotherhood very much do distribute propaganda.
Now as an important point, I think historical incidents are something else entirely. Decades after the smoke has cleared, I think real life becomes fair fodder for video games. The Cold War, World War II, Vietnam, they are all a relatively distant memory, while things like "The War On Terror" and the cartel wars in Mexico are still ongoing.
The reason why the US is an exception is because I think we're in a league of our own as a nation to be honest. As arrogant as it sounds, it's important to note that the US is it's own worst critic, and the US goverment is pretty much a stock villain in American fiction to begin with... to the point of being an almost painful stereotype (oh noes, it was the goverment conspiricy!). When dealing with other nations nowadays, I think the problem is largely one of context. Like it or not, Mexico isn't in great shape as a country for example, while the US has a lot of problems, the military publically turning against the goverment isn't one of them, and hasn't been for a long time (and The American Civil war is fair game for video games anyway). With all the problems Mexico has keeping it's own people on it's own side of the border and everything else, not to mention how that violence spills over into US cities like El Paso, I think it's not entirely unfair to portray rogue Mexican military units as bad guys, assuming you do it totally in the context of fantasy.
See, the differance is that in general when people want to make games where they shoot at US troops and such, it's typically active duty military and such operating for the goverment, because your looking at a situation where they want to make an Anti-US statement, and there are usually some pretty borked politics involved. On the other hand when your dealing with rogue elements of the US goverment, that's typically fair game. Look at say "Metal Gear" for example, it was made in Japan, it's pure fantasy, and it generally comes down to the US military against the US military. It was done in such a way that unlike "playable Taliban" or a hypothetical game where you say played Mexicans invading the US or whatever, it didn't offend many people, and actually became a big success.
The dual standard ironically being a matter of maturity, that only a very nations, games and game companies/developers seem to be capable of.