What does Zeus' attitude about Lycaon's crime reveal about the development of Greek religion?
A good and tough question. Remember that Ovid was writing for readers who would likely know the core stories he was telling, and so they'd be able to fill in the background when he just sketches a bit of the story, as he does here. To see this, you'd need to recognize that Lycaon served Zeus a meal where the meat was, well, human. Zeus rejected it, disgusted, and punished him fiercely, turning him into a wolf.
What this says about Greek religion is mostly that the rejection of human sacrifice marks a major turning point in both ethical action expected of humans and in the nature of sacrifice one makes to the gods. To kill humans is to become inhuman, in this case literally. It also marks a kind of psychological savvy that marks Greek myth, in that it gives us a metaphor for the killer: the wolf, the lone wolf who savages a pack he should protect.
Well, I thought his name was Jove not Zeus but nevermind, I will stick with the name "Jove".
After witnessing terrible destruction caused by the Giants' uprising and rebellion, this makes him suddenly recalled an experience long time ago with a man named, Lycaon, who had went overboard with his means of hospitality when he offered him a meal, which is a a piece of raw human meat to feast on, which is definitely unacceptable. He also planned to kill Jove so Jove rejected the offering and was infuriated by this meal that he had punished Lycaon by turning him into a werewolf as a lesson.
This correct people about Greek religion and may help codify ancient taboos concerning lack of good hospitality, cannibalism and murdering of people. It believes also that human sacrifice is ethically wrong and it is an immoral act to be doing.