Cracking jokes about sleeping with someone's mum....that's fair 'bants' in my book.
Mocking someone's wife's illness is not.
I'm pretty sure most people would agree there's a line, and it's somewhere between those two actions.
It might have been slightly mocking, but it wasn't a particularly savage joke I thought... Implying she could play GI Jane in a film isn't that bad really is it? You could even even play it off as a bit of a compliment that she still looks good and the look suits her. From recent pics of her it appeared that she had accepted her condition and had accepted how it looked.
At the end of the day she's lost her hair and if she feels sensitive about it then the joke shouldn't have been made (and it wasn't really a good joke anyway), but the tone wasn't particularly insulting, just insensitive. And the medical condition she has is that she's lost her hair - not like she's dying from cancer or something.
Basically, despite being poor taste and not a great joke, I don't see how it could possibly have warranted that response from Will (and it wasn't even an immediate response, after recovering from laughing he had a good amount of time while walking up to Chris to think 'hold on, what am I doing here').
The bar for speech that deserves immediate physical violence is pretty damn high (or low, I suppose) in my books. And in that context I'm not even sure it would ever be justified whatever was said - there are other ways to address things.