Section 185 Insult: The penalty for insult is imprisonment for a term not exceeding one year or a fine and, if the insult is committed publicly, in a meeting, by disseminating content (section 11 (3)) or by means of an assault, imprisonment for a term not exceeding two years or a fine.
While I personally am unsure about the handling of that situation, I think police is legally able to justify the use of force in this situation by saying "Oh, the situation was difficult and we had to act now to ensure that we are able to identify the person." The woman who tried to "help" the man by intervening is legally also in trouble; if the police had the capacity and the will to act.
Funfact: Generally, you can call them "cows" in German so "Bulle", because it is so well established that it no longer counts as an insult but only as colloquial language.
I disagree with what you are implying in the second sentence, but agree with the third. I don't believe that in general (so individuals might) the police acts more forceful against pro-Palestine demonstrators. However, I do agree that politically Germany is doing fuck all for Palestine.