Indeed.
No, not really. To explain part of the situation:
There is the Basic Law in Germany, for example, akin to a constitution, whcih states unchangeably that the basic rights of a citizen may not be violated in any way: it can and is interpreted that the basic righhts of a citizen include not having to listen to someone advocate openly killing the handicapped or killing all blacks.
*snip*
To quote the relevant portions of the Grundgesetz:
Article 1
(1) Human dignity is inviolable; to honor and protect it is the duty of all governmental power
(2) The German people have acknowledge the inviolable and unalienable human rights as the base of all human communities, of peace, and of justice in the world
Article 2
(1) Everybody has the right to free display of his personality, unless this violates the rights of others, the constitutional order or ethics.
Article 5
(1) Everybody has the right to express and publish his opinion in [spoken] words, writing or pictures and to inform himself by means of publicly available soruces. [...] Censorship does not take place.
(2) These rights are limited by general laws, [...] and the right to personal honor.
Article 9
(1) All Germans have the right to form clubs and societies.
(2) Societes whose purpose violates criminal law or is directed against the constitutional order [...] are illegal.
Article 18
Whoever abuses freedom of expression (Article 5), [...] the right to form societies (Article 9) [...] to fight against the liberal democratic order, forfeits these basic rights. [...]
I think that´s pretty much it. I just translated this myself "on the fly", and I´m no lawyer or anything, so some of the terms may not be quite right.
In my view, Article 1.1 and 5.2 (last part) clearly say that hate speech does not have to be tolerated,
especially if it contains outright lies about those it is directed against - as Holocaust denial does.