It’s all right. Catholics (and Orthodox) both are right in creating images.
In reading the Old Testament you have to remember that many things changed when Christ came in the flesh into the world. Before Christ, man did not really have a clear sense of who God was; however, in Christ, who is God, we can now create icons and the such as means to worship God. We do not worship the icons or the statues; but rather we worship the person whom they represent–in many cases, Christ, who is God.
We make icons and statues of the saints for similiar reasons. With the descent of the Holy Spirit, people become sons and heirs of God. People also become temples of God, as the Holy Spirit lives in them. We therefore owe devotion to these holy men and women who are glorified by God.
I probably didn’t explain that the best, but if you want a good explanation, check out St. John of Damascus. He defended the use of icons, and because of his writings, the Second Council of Nicaea in 787 confirmed the use of religious icons.
Many Protestants are critical of the Catholic use of icons and statues because of the commandment you mentioned. However, most Protestants end up being unfaithful to their own views by holding to a strict interpretation of this passage. Let’s look at it more closely:
Thou shalt not make unto thee any graven image, or any likeness of any thing that is in heaven above, or that is in the earth beneath, or that is in the water under the earth: Thou shalt not bow down thyself to them, nor serve them: for I the LORD thy God am a jealous God, visiting the iniquity of the fathers upon the children unto the third and fourth generation of them that hate me; - EXODUS 20:4-5
Notice how there are two injunctions. The first one is to not make any graven image or likness of any thing that is in heaven above, or that is in the earth beneath, or that is in the water under the earth.
If one were to read that strictly, that would mean absolutely no art, no sculptures, no photography, no stuffed animals, no computer images, no lawn ornaments, etc. Surely nearly all Protestants (with perhaps the exception of the Amish) do not take this passage literally. In fact, if you go to the Protestant capital, Geneva, you’ll find statues of the Reformers. Also, many Protestants, though they are hesistant to put a statue of an apostle in their church, have no qualms about setting up a criche in front of their churches during the Christmas season. Another thought: when you read New Testament accounts about Jesus, your mind naturally creates images of Jesus. These images may not be physical replications of what Jesus truly looked like, or even what others around him looked like, but when we pray to Jesus thinking of these images in our mind, we are not praying to the image, but to Jesus (God) Himself.
The second injuction tells us not to bow down to these creations. If you read the Old Testament, you will notice that in many cases people created statues–as in the Golden Calf–and believed that the statues were actually a god, or believed that the statues were a replica of what a god looked like. In the polytheistic world in which the Jews lived, to bow down to another god was to deny the one true God. Notive how in the last sentence it mentions how God will revisit the inquity “of them that hate me.” This phrase really accentuates that this commandment was created by God in fear that people would create statues and end up worshipping a god rather than God.
So, in short, you really have to take into consideration the incarnation and the ascension (remember that Jesus is in heaven in the flesh, too).
Here’s a good link:
Go especially to Chapter XVI
Hope I helped