The reaction from Iowans has been pretty much universal disgust.
The Fair is backpedaling--er, "clarifying" (actually, that is a better term where butter is concerned, isn't it?). "Michael Jackson will be featured in a small side portion of the sculpture as the first pop-star to perfect and popularize choreographed moonwalking. We are not honoring him for his character, but recognizing his piece of Iowa State Fair history."
The other justification is that he has a place in State Fair history; the Jackson Five performed there in 1971--but if that's the case, shouldn't they have a butter sculpture of the young, pre-creepy Michael Jackson?