This argument, furthermore, was itself deemed heretical by the universal church, which (unless Protestantism sprung from the sixteenth century ex nihilo) includes Protestantism.(source)
In the comment box there, Steve Hays has already demonstrated one of the holes in this argument (namely that icon-rejecting Protestants are themselves at least a part of the universal church), but there are several other holes in the argument:
1) The Iconoclastic Council of 754 with 338 bishops in attendance unanimously condemned the use of images of Christ.
2) The later council of 787 to which Mr. Milliner was appealing was convened to try to overthrow the earlier council. Like the council of 754 it called itself an ecumenical council, but it wasn't universally received.
3) In fact it was initially rejected in the west by, for example, the council of Frankfurt (called by Charlemagne) of 794. Naturally, as with all these sorts of disputed topics, folks have tried to argue that Frankfurt actually rejected a bad translation of the council of 787.
4) It was also rejected by various bishops in the East including, most famously, Patriarch John Grammatikos (also known as John VII of Constantinople or John the Grammarian) (patriarchate from 837-43).
5) We might also add that the entire argument that something was "deemed heretical by the universal church" is the sort of polemic claim that has been popular since the 4th century, but which always begs the question of the definition of the bounds of the church. When the church is defined to include only iconophiles, then one gets one result, when the church is defined to include only iconoclasts, a second result, and when both are included, a third result.