For one thing, mockery should normally target not people but their actions. The wisest man will occasionally do the dumbest of acts, and it's both valuable and amusing to point out that the emperor has no clothes. [1] There's a big difference between this style of mockery and the direct insult: "George Bush is stupid," "Bob Dole is humorless," or "Jack Schmoe needs to get a life." As Baude points out, both may be funny--but the latter, no matter how witty, is purely insulting and I'm not convinced should be acceptable.

Secondly, if one is going to mock someone else, then the accusation has to be just, or else the joke risks stating more about the speaker than his intended victim. Suppose, for instance, that prior to Martha Stewart's recent fall I had caught her making some very small error in dress sense, and decided to highlight it, attaching perfectly withering commentary. Anyone who didn't already share my (hypothetical) loathing of Ms. Stewart would be unimpressed, particularly if I didn't have stylistic credentials to back up my bile. Indeed, to someone who approved of Ms. Stewart in general, I'd look rather petty.

I think that in many cases 'humor' is used as an excuse for behavior that would otherwise be inexcusable. As is often the case, the argument here can be better made by C. S. Lewis' demon Screwtape. (Remember that he's teaching a young tempter how to corrupt a soul, and that the 'Enemy' is God.):

The real use of Jokes or Humour is in quite a different direction, and it is specially promising among the English, who take their "sense of humour" so seriously that a deficiency in this sense is almost the only deficiency at which they feel shame. Humour is for them the all-consoling and (mark this) the all-excusing, grace of life. Hence it is invaluable as a means of destroying shame. If a man simply lets others pay for him, he is "mean"; if he boasts of it in a jocular manner and twists his fellows with having been scored off, he is no longer "mean" but a comical fellow. Mere cowardice is shameful; cowardice boasted of with humorous exaggerations and grotesque gestures can be passed off as funny. Cruelty is shameful--unless the cruel man can represent it as a practical joke. A thousand bawdy, or even blasphemous, jokes do not help towards a man's damnation so much as his discovery that almost anything he wants to do can be done, not only without the disapproval but with the admiration of his fellows, if only it can get itself treated as a Joke. And this temptation can be almost entirely hidden from your patient by that English seriousness about Humour. Any suggestion that there might be too much of it can be represented to him as "Puritanical" or as betraying a "lack of humour."

But flippancy is the best of all. In the first place it is very economical. Only a clever human can make a real Joke about virtue, or indeed about anything else; any of them can be trained to talk as if virtue were funny. Among flippant people the Joke is always assumed to have been made. No one actually makes it; but every serious subject is discussed in a manner which implies that they have already found a ridiculous side to it. If prolonged, the habit of Flippancy builds up around a man the finest armour plating against the Enemy that I know, and it is quite free from the dangers inherent in the other sources of laughter. It is a thousand miles away from joy; it deadens, instead of sharpening, the intellect; and it excites no affection between those who practise it.

--C. S. Lewis, The Screwtape Letters, Chapter XI

[1]: But as far as this kind of humor goes, even here mocking the subject is a kind of back-handed compliment. To quote Neil Gaiman, "It has always been the perogative of children and half-wits to point out that the emperor has no clothes. But the half-wit remains a half-wit, and the emperor remains an emperor." Mocking the actions, or even opinions, of George Bush or John Kerry is tolerable precisely because whatever I might say about them, they remain powerful and influential people. Were I to mock a rising-1L in the same way, however, I'd be justifiably viewed as arrogant and uncouth.