I still have to side with FB on this one. The problem isn't this ONE photo that could be clearly an exception to the rules. The problem is the THOUSANDS of other photos which might be grey areas, and the people griefing, trolling, or have legitimate concerns about being able to post them.
Moderation is HARD and IMPOSSIBLE to do consistently. Just look at the little slice of internet that is the BB BBS. Moderation here a few years ago was much less consistent. Even today there are disagreements on what should or should not be discussed, which comments are out of line, whether an argument is a true argument, or someone just looking to be a dick and argue about something.
On top of this, FB is mainly a general social platform, to keep track of friends, loved ones, and cat videos. It isn't like a legit news site where people are dependent on it to learn the truth of events (according to some of the shit that pops up on my feed, it is just the opposite.)
They could have cropped the photo, put a click baity title (You won't believe why this child was covered in napalm and lit on fire.) and then linked to a page showing the full photo and the context behind it.
I can agree that the policy is a bit lazy, but at the same time moderation and weeding out content is time consuming, expensive, and there WILL be inconsistent moderation. Maybe if they started charging users a monthly fee it would be worth their while? But considering it is FREE, I think they owe the user nothing. If you disagree with the way they run their ship, use something else.
Same with the BBS. Not everyone agrees with mod decisions, but it is their ship and their servers, and sometimes it is easier to ban someone than let them continue to muddy the waters with their voice.
ETA - also private groups can post anything the want.