"will that mean that half the world will boycott those games because of Britain's involvement in Iraq?"

Legitimate protest is to be tolerated whether you agree with it or not. Given the circumstances we went to war with Iraq, the use of cluster munitions and the large number of civilian deaths cause, let before we even start on the human rights at Abu Ghraib etc, perhaps a boycott of London isn't such an unreasonable idea from an Arab point of view.