I am a latecomer to this thread, but I am glad I didn't miss it altogether.
As far as I know, the Jews of the 1st century did not have theater, but at least once Jesus referred to acting in the scope of children's games, when he said "...play wedding and do not rejoice, and play funeral and do not weep." But Jesus used many illustration in which He gave no moral judgment-- war, stewardship, robbery, et al.
However, God does promote acting on some occasions in scripture. One outstanding one is in Luke where the 2 disciples are walking to Emmaus, the resurrected Christ joins them and they are prevented from recognizing Him (by what means is not stated). But if He kept them from recognizing Him, that is deception in one form or another. Of course in the beginning of the 'holy' nation of Israel, it was deception by means of artificial prop that kept Isaac from knowing he was bestowing the blessing on Jacob that he meant for Esau. But the blessing held up, in spite of the human-engendered deception plot. And then Esther... keeping it a secret that she is Jewish, which inevitably meant she was not eating, washing, et al, as the law requires, as well as marrying a foreigner, and did not reveal who she really was until she assumed the risk to save her people.
As for the skirmish here about saying certain words... surely among the most vile words ever said were what some Pharisees said about the power through which Jesus was casting out demons. Jesus let them know they had committed the sin for which there is never forgiveness in this world or in the next. Did the gospel writers also commit this sin when they quoted the Pharisees? No, this was not acting, but that's not the point. The point is the words themselves, whoever says them under any circumstances-- verbally or in writing, quoting or expressing one's true thought. And why should Christians have less reverance for God than the Jews, who still do not utter His proper name, no matter if they are speaking their own thoughts or quoting? It comes down to whether you actually mean the contempt or vulgarity you might be saying in order to shock or blaspheme, and inevitably to whether it is right to entertain or not.. and we try to do quite a bit of entertaining of each other on these threads.
It certainly would be hard for me to condemn portraying Shylock in The Merchant of Vencie, since that is one of my favorite dramas and I once wrote a research paper on it. Shylock, as Shakespeare's derived character from a popular personage of late medieval drama, was actually very human and feeling compared to the stereotype of the Jewish moneylender; compare Marlowe's The Jew of Matla. But the 'Christians' at enmity with Shylock in the play are little, if any, better than "the Jew." But there's too much I could say about this subject from what I remember from performances and my research paper.