It's interesting how a debate about Israel has appeared in relation to a question about images. It could be a separate debate, but I think there really is an important link to be made.
When the Word becomes flesh, the eternal God takes on a particular, historical human form. That's something which to me flows straight out the history of the people of Israel, where God identifies not just as 'God' (in general, whatever we mean by 'God'), but as the God of Abraham, Isaac and Jacob (of Israel). He's a God who did things, who said things, with a Name.
Jesus/Yeshua likewise is not an 'ideal', but a historical Jewish person. So, theoretically, art can depict Jesus. That's got to be valid due to the incarnation, even if it always carries with it the risk of distorting Jesus too (e.g. when he's depicted as a white European!).
I believe the command in Exodus 20 is about when we begin to worship the mute statues themselves, and the 'gods' which human beings create to reflect ourselves. Art is different. We don't (or Exodus 20, I believe, clearly teaches we shouldn't) worship art, but art can still help us to think about the living, risen Lord and Saviour, Jesus Christ!
A most frequent danger I see whenever we sever Jesus from His Jewish identity, is that we risk turning Him into a kind of divine superhero figure (the Jesus of our imagination), rather than the Messiah of Israel (the real Jesus we encounter). There's got to be no surer sign that we'd departed from the Jesus, than when we see the Jewish people today as having been disinherited.
Jews are still Jesus' own people, Israel is still Israel, and Jesus wouldn't be Jesus if Israel were not part of him, just as Jesus is part of Israel.
The image we have of who Jesus is in our mind's eye directly relates to that. It has real consequences in terms of how Christians think of, and therefore treat, Jews.