But doesn't this course of action ultimately play into their fears? Won't there be a worse backlash now that a rape group, which happened to be Islamic, was let off the hook for politically correct reasons?

Absolutely. This whole situation was so badly handled by the authorities that it's almost unbelievable, according to the wiki, the police new about this for over 10 years before they did anything about it:

"Evidence of the abuse was first noted in the early 1990s, when care home managers investigated reports that children in their care were being picked up by taxi drivers. From at least 2001, multiple reports passed names of alleged perpetrators, several from one family, to the police and Rotherham Council. The first group conviction took place in 2010, when five British-Pakistani men were convicted of sexual offences against girls aged 12–16. From January 2011 Andrew Norfolk of The Times pressed the issue, reporting in 2012 that the abuse in the town was widespread, and that the police and council had known about it for over ten years."