The above really doesn't do justice to how this event is handled in the episode. The Klingons claim that Laas provoked them, and there are witnesses that support this point of view.
Odo claims this point of view is absurd, of course, and that the whole incident is an example of prejudice against changelings. It is. And we are meant to sympathize with that point of view, but it is perfectly plausible that passers-by on the promenade might feel "menaced" by a changeling shapeshifting ostentatiously during a war with the Dominion, and be swayed by their prejudice to support the Klingon point of view.
In Odo's words: "They are only doing this because he is a changeling."