1029: You're right: roughly 1% of the US Population is Jewish and .5% is Muslim, but that doesn't mean that 98.5% are Christian. 15% are of no religious affiliation such as myself, not to mention there are small percentages of other various religions.
As an irreligious person if it's a Christmas Village call it a Christmas Village. Whether it's a Christmas Village, Holiday Village, Christmakwanzadanika Village or just plain ol' "Village" one thing is certain: I wouldn't be going there either way. This isn't because I have some aversion to Christmas mind you (I take an apathetic stance towards the holiday, and all the songs and shit can be annoying), but it seems like a clusterfuck of idiots and I would want no part of it.
On one hand I can see trying to be all inclusive, to appeal to biggest base possible. However, if it is strictly religious (i.e. a Navity Scene) then it should be a Christmas Village. Of course I would question the Government violating the Separation of Church and State if that were the case.