For the first time, Jim was able to look like the saner of the two co-managers. It didn't take much on Jim's part, as he was only being himself. This is easy, when Michael was entwined in perceived authority, sexism, and jealousy. His own personal insecurities and entitlement have led to him believing that he has the right to not only be Santa Claus, but to also take it away from Phyllis. Predictably, anytime MIchael finds himself in competition and taking things personally, it gets ugly. The predictability ends at the point Michael stops trying to want to become Santa, and chooses a different costume.
"Behold, Jesus Christ."
To a fundamentalist like Angela, she finds this not only acceptable, but also applauds it as well. To everybody else in the office, they take great exception to it. Though Michael has the right idea that Christmas is a Christian celebration, he is completely lost on how his employees will take his costume. He is unable to comprehend that his costume is coming off as an offensive mockery, and he goes so far as to heckle Phyllis as she was handing out presents. Michael eventually comes to his senses, but only out of sheer shock.
Not everybody gets to celebrate Christmas. With upper management losing their jobs, and Michael's misunderstanding, he communicates the wrong message to his employees, further damaging their morale. But somehow, his horrifc boundary violation also led to the employees finding out that their jobs were secure. With all the fears that everybody was experiencing this season, Michael was able to fumble his way out of yet another disaster.