One must consider that the reverse side of the freedom coin, is obligation.
While I tend to believe more strongly in freedom of speech, then in having a hate speech law, the simple reality is that too many people would use their freedom to incite hatred of other groups. The KKK come to mind. Hitler as well.
And if you read the story, you will find that the person was asked to offer an explanation. He was not thrown in jail, was not criminally charged, was not censored and was not deprived of his liberties. He was simply asked to engage in a debate. Which is the essence of democracy, to be able to argue one's position.
What is also interesting, is that rather than take the common view that all Muslims will resort to suicide bombings to redress an alleged offense, the group has taken the officially sanction legal route. Rather than simply blowing up the "infidel", they are abiding by the political culture of the host state.
The argument that hate speech legislation has no place in society simply has not been sustained.