i don't think it's the cake itself thats a problem moresdo the cake-cutting ceremony which causes needless finger-pointing.
I saw it being done at a big Mawlid Procession in New York. Shaykh Chakswari of Birmingham was in it. The video is on youtube.
It seems a bit much to me to have birthday cake as part of the mawlid celebrations. True that i did partkae in said cake and enjoyed eating it, but i was wondering about the concept until someone mentioned that they saw it on noor tv as well.