Considering that I never heard a rapper reference M&M's in their songs, I'd say that people thinking that would have come to a rational conclusion.
Has Game at all responded with anything like "it wasn't a diss, but since a lot of people are takin' it that way, I want to apologize to Jay, it wasn't meant the way you're taking it"?
That's how I'd handle the situation if I were Game. He says he respects Jay so much. OK, if my music ever blows up and I start getting to make big time records if I had a line that people took as a diss towards Ice Cube, who is one of my favorite rappers ever, and it really wasn't meant as a diss, I'd come out and be like "It wasn't a diss, it was never meant at one, and if Cube took it as a diss, then I apologize, because I'd actually like to work with Cube if anything."