Should it be illegal in a free country to spout nonsensical lies grounded in bigotry?
A brief word on the Holocaust denial laws in Austria and other European countries. While I don’t think Holocaust denial and editorial cartoons posing questions about Muhammad are moral equivalents (I explained why in detail here), I think these laws are outdated and should be repealed as soon as possible.
The criminal conviction of faux historian (and now martyr) David Irving, whose opinions are condemned by anyone with a brain, could not have come at a worse time. No one could be less friendly to Irving than Deborah Lipstadt, who was sued by him, but who admits the laws are no longer needed:

In 2000 [Irving] lost a highly publicized libel lawsuit in London against Lipstadt and her publisher, Penguin Books, after Lipstadt called him a Holocaust denier in her 1994 book, “Denying the Holocaust: The Growing Assault on Truth and Memory.”
That victory, perhaps, helps support her conviction that books, and not laws, are what should fuel the fight against denying the Holocaust.
“We don’t need laws to fight Holocaust deniers. We’ve got history on our side,” she said.

Mickey Kaus has more, and so does Glenn Reynolds, who adds that “this further exacerbates the ‘censorship envy‘ of the radical Muslims,” which it does.
I also think it helps whatever Nazis there are out there, helps the Islamofascists, while seriously damaging the moral authority of Western countries to condemn censorship.
While it would be tempting to argue that an American equivalent would be a law forbidding the denial that slavery ever existed, it isn’t quite so simple as that. According to Meryl Yourish, the laws were originally passed in the immediate post-Nazi period to prevent a Nazi resurgence. That may have been a pragmatic approach at a time when tens of millions of people were dead, and half of Europe occupied. But after the passage of more than sixty years, aren’t these countries mature enough and stable enough to handle crackpots unable to recognize reality? If the answer is no, then I don’t think any laws will help them.
Actually, I think a good case can be made that laws like this help spread the very views they’re intended to combat. Nazis and their supporters are today a tiny minority. I think it’s fair to call them deluded psychos. Because they know they’re outside the mainstream and will always remain that way, such people take delight in any opportunity to prove that they’re being persecuted by the evil Jewish conspiracy. Laws making it a crime to deny the Holocaust make it far too easy for them to do this, all the while screaming bloody murder about how they’re “victims.”
I can’t think of a better way to transform an alliance between European Nazis and Islamofascists into a growth industry.