Jerri Williams, a SEPTA spokeswoman, said Thursday that officials at the transit system were disappointed but respected the court's decision.
"We're currently evaluating our options, including whether or not to file an appeal," she said.
The law gives SEPTA a month to decide.
"We're sitting tight to see what SEPTA is going to do," said Abby Stamelman Hocky, executive director of the Interfaith Center of Greater Philadelphia, a decade-old coalition of religious groups, which opposes the ad.
If it runs, she said, "we are going to be sure that this is a moment where Philadelphians know that this is not what we in Philadelphia are about."
In that vein, Hocky said, her group chose SEPTA as a corecipient of its annual "Dare to Understand" award, to be presented April 29 at the Academy of Natural Sciences of Drexel University.
The announcement of the award praises the transit authority as responding "to these hateful messages in a way that serves our community's best interests."
The black-and-white ad with block-letter typography features a photograph of a 1941 meeting between Hitler and Haj Amin al-Husseini, a Palestinian Arab nationalist who made radio broadcasts supporting the Nazis.
It was produced by the American Freedom Defense Initiative (AFDI), a New Hampshire-based nonprofit, which argued in legal filings that the ad was germane and timely "in light of the fact that many Jews (and Christians) are being persecuted in Islamic countries in the Middle East."
The organization, cofounded in 2010 by conservative commentators Pamela Geller and Richard Spencer, has won similar free-speech battles over its ads on transit systems in New York City, Boston, and Seattle.
"Brilliant news, freedom lovers," Geller posted on her website Wednesday. "We won in Philadelphia. ... Oorah!"
SEPTA rejected the ad after it was submitted in May, saying it failed to conform to the transit authority's prohibition on advertising that "disparages" any person or group "on the basis of race, religious belief, age, sex, alienage, national origin, sickness, or disability."
The transit system argued that plastering the ad across city buses and trains could encourage harm or incivility to Muslim employees or among its one million daily customers.
"These ads are despicable and false, but fall under First Amendment protections," Jacob Bender, executive director of the Philadelphia chapter of the Council on American Islamic Relations (CAIR), said Thursday. "We have no problem with the judge's ruling, but have a great amount of antipathy for AFDI pushing a clearly hate-inspired, anti-Muslim message on the citizens of our fair city. One can only imagine the revulsion that tens of thousands of Muslim citizens will feel getting onto SEPTA buses and trolleys" bearing the ad.
"The First Amendment protects everyone, the hateful and the loving alike," added CAIR staff attorney Ryan Tack-Hooper. "Instead of suppressing dishonest and offensive speech, the American tradition is to respond with speech of our own. You can be sure we will."
Rue Landau, executive director of the Philadelphia Commission on Human Relations, was similarly concerned. "Ads like these . . . clearly violate our values," she said in an interview, "even if the judge ruled they don't violate the law."
SEPTA acknowledged at a hearing before Goldberg in December that it closely scrutinizes advertising only when the company it contracts to sell ads has questions about whether they might comply with those standards.
In his opinion Wednesday, Goldberg cited past public-issue advertisements run by SEPTA on topics such as animal cruelty, teacher seniority, contraception, religion, and fracking that also had a potential to offend.
"Although SEPTA's concerns [about the ad] are not immaterial," the judge wrote, "it cannot properly claim a legitimate interest in enforcing an unconstitutional law."