We deal with it by letting the players, not the background, define their relationships. Our priest is quite bombastic and chides the 'witch' for having intercourse with the devil, but all his threats are made with an implicit some-day-there-will-be-a-reckoning caveat.
Practically speaking the cleric's player has no wish to give the magic-using player a genuinely hard time, but revels in the opportunity for banter.
You can probably guess that our games have a good mix of the lighthearted punctuated my brief periods of OMGWTF is that.
We don't really campaign anymore, so I haven't had cause to try and rationalise a bigger picture. Options run from having Clerics (capital C) in charge of the church either overtly or covertly, to spell casting clerics (small c) being thought of as no better than their arcane brethren.
I think James has mentioned in the past that he no longer has Clerics in his home game (or Dwarves, Elves and Halflings) but I don't know if he still has Clerical NPCs, or whether this implies that some distant future edition of the game may also remove all of those options.
You people are all alike, you march in here, young, try and touch the local things.
I suppose next you'll be spraying me with one of those cans of paint, smearing poor Tubbs here with excrement.