This article from the Los Angeles Times provides more details of the rumors that were circulated by the press. For the most part I've focused on the impact the media's coverage had on the response of those who were trying to deal with Katrina's wide-spread destruction. However, it's also true that the most lurid stories were circulated world-wide, undermining the image and the prestige of the United States.
Supposedly, Tony Blair denounced the BBC because it was "'full of hatred of America' and 'gloating'" over the Katrina disaster. What's interesting is that he supposedly denounced the BBC to Rupert Murdoch. I watched a lot of Katrina coverage and I can tell you that I didn't detect any greater "hatred of America" on the BBC than on Murdoch's SKY News. In fact, my impression at the time was that the situation sounded worse on SKY than it did on the BBC. And, Murdoch's FOX News was one of the prime rumor-mongers upon which anti-Americans the world over feasted.
I wish I had the time to go back and review the coverage - television, radio and newspapers - that we got here from both British and Irish sources.