This dredges up the old divide/replacement debate about sports and politics. Someone with a better handle on the specifics could speak to the role of the ancient Olympics in greek society, but certainly they were intended as a counterpoint to battle at some level, and the modern olympics have retained this in their ideals, even prompting a UN-sanctioned notion of the 'Olympic Peace'.
But, of course, politics have found their way into the modern Olympics. Hitler used the 1936 Berlin games to showcase the supremacy of the Aryan race (until Jesse Owens blew a few holes in that theory), and the USA and USSR traded boycotts in 1980 and 1984 (ours was ostensibly to protest the invasion of Afghanistan, theirs was basically a 'right back atchya' maneuver). I'm of the opinion the boycott was a terrible idea, mixing sport and diplomacy in all the wrong ways and accomplishing nothing in either arena. However, I think Tommie Smith and Juan Carlos' salute at the 1968 games was completely within their rights as athletes and citizens, showing solidarity with people struggling against oppression.
However, Smith and Carlos were commenting on their own country--would there be more of a breach if an American athlete wore a 'Free Tibet' T-shirt on the podium in China? I don't know. Still, I hope someone does--ideally, I hope a Chinese athlete does, but I sincerely doubt that will happen.
Just to close out my rambles, here's another wild story about the collision of the olympics and politics.