There are images similar to Orthodox Christian ikons that are commonplace in Shi'ite communities, especially in Iran. There are also Muslim works of art depicting Mohammed (PBUH) in Central Asia, and neither these nor those in Iran are considered inflammatory and neither are they censored.

Actualy, there is no Hadith, there are Hadiths. Different sects of Islam accept different sets of Hadiths. Your latter examples correspond to Shi'a Islam and Sufi branches, I suspect.

_{*Lunatic*, n.
One whose delusions are out of fashion.}