I dont see the big deal. When taking subsidies (the film was paid for in part by taxpayers) you have to follow certain rules. This is just more American-style French bashing in vein of stuff like "Freedom fries."
I don't think it is quite Freedom Fries. More like the Academie Francaise's control of the French language or laws banning foreign words. There is French-bashing, but there is also a French tradition of dirigisme which often verges on the absurd.
As for the real story, there is a suggestion that it is driven by the entrenched French film studios trying to keep competition out and keep the pie to themselves.
Perhaps its not freedom fries but all the headlines I've seeen here (US media) do not even mention the subsidies to this film. Yet, when NEA, which provides from everything to fine art to community theater ended up producing "Piss Christ" all media headlines included stuff like "Taxpayer money funds..." Its hard not to see this issue as just more US-centric french bashing, regardless of the real issues at hand. I think the editors at WaPo, CNN, et al got a kick out of this.
Well, the version I got was from the BBC, who are not exactly FOXNews.
bah! What is really annoying is not that there is confusion and error inherent in the taxonomy of film and auteurs ordered by nationality. It is the notion of national cinematic styles, etc, etc; and the presumption that directors and film teams, etc. somehow conform to the very stereotypes brought about by primitive systems of classification. So the irony here is not that they got it all wrong in claiming Stone as French, but that there's virtually no benefit in analysing film on the basis of the director's nationality. Bah!