A closer look at this passage from Jeremiah in its context makes it clear that the prophet was castigating the Jews of Jerusalem for their lax approach to observance of Shabbat, and promising them that if they do not change their ways, Jerusalem, its gates and its palaces would be destroyed – this is just one small section of a book filled with warnings against the people living in the years leading up to the destruction of Jerusalem and the first Temple at the hands of the Babylonians in 586 BCE. THIS IS NOT AN ETERNAL CATCH-ALL PROPHECY AND SHOULD NOT BE READ AS SUCH. The interpretation offered in Rav’s name and cited here in the Talmud serves to introduce a full page of theories as to why the first Temple was destroyed, each theory presenting an interpretive reading of a different Biblical passage.
So basically your criticism is that the Judah son of R. Samuel WHO STATED IN THE TALMUD "An [outbreak of] fire occurs only in a place where there is desecration of the Sabbath, for it is said, But if ye will not hearken unto me to hallow the Sabbath day and not to bear a burden …" TOOK SOMETHING OUT OF CONTEXT?? well if we are going to start arguing that line, I guess we might as well just go Karaite. Taking things out of context, is what those Tanaim and Amoraim were all about.
Sorry Dovbear. Regardless of what the bible says, there can be little doubt that the Talmud did theorize a connection between not keeping shabbat and fires. You may not like the usage of the passage, or the pretensions of knowing God's will that the use of the passage entails, but the intention of the talmud is fairly clear.
For a better and more learned criticism of Harav Ovadia's statment read this article (Hebrew) by Harav Yoel Ben Nun.