First off, props to Paizo for another great issue. Now to the meat of my post. I personally don't find the cover offensive. Certainly not as revealing as People or Us Weekly. Besides, D&D is a game that emulates life in a fantasy setting. To say that sexuality and seduction shouldn't be a part of fantasy life is to reject reality. Murder, sex, drugs, and many other horrible things happen out on the streets every day. And if these things happen today, why wouldn't they happen in a land where you have to fight to survive? While Paizo did pick a provacative cover, it's not nearly as bad as it could have been.
Second, as long as the cover relates to D&D, there's no reason it shouldn't be there. Obviously, Dragon is not a porno, so there's no reason that the cover or any artwork inside should be explicit. However, scantily clad monsters (even though a medusa is a woman, she's still a monster) should create little controversy. Besides, what adventurer with an intelligence of 10 or higher would stop and comment on how pretty a medusa is?
Third, I am not here to say that those who find the cover offensive are wrong. They are merely expressing their opinion, and under protection of law, they have that right. However, you should not demand that Paizo tone down what seems to me, quite a subtle mag. If you are really offended by the artwork, don't look at it. Paizo should not have to change their mag to conform to a select few opinions. You do have the right to censor what you and those you are responsible for see, but you don't have the right to demand Paizo change their tone. Under protection of law, Paizo has free reign to put any artwork on the cover they want. However, I believe that the people at Paizo have a great moral code and only pick covers that relate to the material inside, and for that, I applaud them.
Lastly, I think the wording on the cover is perfectly fine. "Get Your Thrall On", while a little odd, makes perfect sense when you read the article it speaks of. Using such phrases appeals to different types of people, and if you don't like it, then ignore it. And "Serve D&D's Original Demon Prince" is nothing less that what it says. It merely describes a template that can be added to any character. Obviously the Thrall of Pazuzu is going to serve Pazuzu, so the context of the cover explains exactly what it means to.