As far as objectification goes, I doubt any video game - particularly an MMO - is going to be completely free of it until we mature more as a society. Look at movies, they've been around for decades and if anything, they've gotten worse.

I actually think the dev team did an admirable job keeping things relatively sex-neutral in FFXIV. Baring a few minor instances (the infamous Coliseum gear, for instance), the game has been pretty fair minded about the whole thing. I'm rather impressed by the restraint shown by the dev-team with the breast size option in ARR, for instance, which is totally reasonable in size. Similarly, they showed some great social awareness with the prostitutes in Ul'dah, which existed, but always were cast in sort of a dark, seedy light.

The "Jiggle physics" question probably was just an attempt at lightheartedness. On the other hand, as has been mentioned before, Japan is a very sexually charged society. It may have been just be a nod to their primary demographic in an attempt to garner support with the Japanese middle class. If so, it was a pretty minor concession, so I think it won't be a problem.

Two steps forward and one step back is still one step forward. I'm pretty satisfied overall myself, though there are certainly issues to be taken with a few choices made in the sexism department tm.