Q:

Why is Idolatry a sin

What is the wisdom behind declaring Idolatry as a cardinal sin in Judaism? What is wrong if the true God  as well as some other person\Object is worshipped along with him as long as he is not leaving the worship of the God of Israel?

A:

You make it sound like somebody declared idolatry to be a cardinal sin.
But it was G-d Himself who declared so - nobody made up the rules, we got them from G-d.
Note that the first 2 of the 10 commandments are:

To believe that only He runs the world (so it makes no sense to worship anything else)
One may not worship anything else besides for G-d Himself.

By worshiping anything else you are trying to degrade the Uniqueness and Power of G-d, by equating him - at some level - to the other item(s) you worship. This is affront to G-d which He declares (in the 10 commandments) that he will punish severely.

A:

The reason God considers it a capital offense is because it is incompatible with Judaism. i.e. Once you start worshipping other than God, the foundations of torah observance falls apart. You now have several masters. You cannot fully place your trust and hopes in God and therefore cannot worship Him properly 
Here's a quote from the shaar yichud of chovos halevavos (start of intro)

After investigating after what is the most necessary of the
  cornerstones and fundamentals of our religion, we found that the
  wholehearted acceptance of the unity of G-d is the root and foundation
  of Judaism. It is the first of the gates of the torah, and it
  differentiates between the believer and the heretic. It is the head
  and front of religious truth, and one who strays from it - will not be
  able to perform religious deeds and his faith will not endure.

Even so, some sins are actually worse than idolatry but are nevertheless not capital offenses. Being hypocritical in one's service is in some sense worse, but at least it is not totally incompatible with Judaism. You have to start somewhere. Here's a quote on this from Chovos Halevavos gate 5:

Similarly we can say for the idol worshipper, that ignorance of G-d is
  what brings him to this (he hopes to get benefit or protection from
  the idol). However, the idol worshipper is to be preferred over the
  flatterer (hypocrite) in the following four ways:
(1) In our times, there are no prophets which can perform miracles to
  clarify to the idol worshipper his faulty outlook, but the flatterer
  in G-d's torah (who performs the service of G-d to impress people, as
  above), there are grounds for a claim against him, since he undertook
  the commandments to serve G-d alone and undertook the prohibitions not
  to serve someone else (than G-d).
(2) The idolater worships something which does not rebel against G-d
  (sun, moon, stars), but the flatterer in G-d's torah worships a human
  being who rebels against G-d as well as one who does not rebel against
  Him.
(3) The idolater worships one thing alone, whereas for the flatterer,
  there is no limit to those he worships.
(4) The idolater's status is visible for all to see, and people guard
  themselves from him due to public knowledge of his denial of G-d's
  existence. But the flatterer's denial is not visible, and people trust
  in him, therefore he is more likely to damage them (influence them
  with his false beliefs) than the idol worshipper.

One can apply the same idea to explain the capital punishment incurred for adultery or incest. These things are incompatible with a torah society and if left to go rampant will irreparably ruin it.

A:

To make the question stronger, the Rambam writes (Hilchos Akum 2:1) that the primary belief of idolaters was/is that G-d is in charge and the idolatry gets its power from Him.  So, if we still believe that G-d is the Boss, what's the problem?
I once heard an explanation that the problem is that if you have an intermediary, all you will care about is what the intermediary wants.  If there is someone "directly" in charge of you, you won't care about what the "superior officer" orders, as long as the entity you are dealing with is happy.  So you essentially sever your relationship with G-d by relating to some other entity as having jurisdiction over you.

