There's several principals here: Jack Black, Kyle Gass, and the Audience.

Jack Black may be forgiven, as he didn't say it and disavowed it (eventually). Kyle, if you're exceedingly tolerant and he issues a reasonable apology and explanation.

But the audience laughing cannot be forgiven - they most of all need to suffer consequences. Their beloved band should never play again. Tenacious D should be nuclear waste where people are shunned for saying they listen to it, certainly that it's their favorite band.