Why Free Speech is Necessary
I think that the case against the "total and complete" free speech position that I take is most sensibly voiced by commenter JeNn:
I think you're inflating the importance of freedom of expression. Heck, it's probably because people like you think it's ok that "if they want to make a big effigy of Muhammad and burn it then they should be able to do that too" that Muslim extremists are able to recruit radicals so easily - because they can then justifiably say that Americans are bigoted and disrespectful of the beliefs of other people.
I would argue that freedom of expression is not a right; it's a privilege that's accorded to responsible and mature people who will not abuse this power to influence others. If you're going to abuse the religious beliefs and cultural identities of others under your right to freedom of expression, you're just going to create discord and make the world a worse place than it already is.
Even if it is a right, it should still be exercised responsibly, with respect and brevity. That's why censorship exists, because they're impressionable people who could easily be influenced negatively and because they're irresponsible people who would use this to their advantage.
In short, I think your stand's too extreme. I'm all for freedom of speech and whatnot, but not if it's going to cause me to turn against my neighbours or create a climate of fear and social instability. Better safe and alive than living in fear under a false distorted notion of freedom.
This is about as well as I've seen it put, so I'm going to argue against this (and more or less only this).
First, the slippery slope. I don't generally like slippery-slope arguments, but here it is totally valid. If my (admittedly ridiculously extreme) example of burning an effigy of Muhammad shouldn't be allowed, where do we draw the line? Am I allowed to call Islam stupid? Am I allowed to condemn radicals? Am I allowed to condemn the moderates who allow the radicals to get away with their radicalism? Am I allowed to criticize Islam at all, on any level? I don't think that there's a clear place to draw the line, and trying to put it at something like "respectful criticism" just won't work, because to many people the only respectful criticism is none. We're seeing this happen in Europe right now, where people are being sent to prison for criticizing Catholicism, and the UN is trying to go the same for Islam (and presumably other religions).
If you put the cutoff somewhere, then what's stopping someone from moving it? If I say "Christianity is full of shit", should I be arrested? What if I say "I believe that Christianity is wrong"? It's the same exact statement, one is just worded provocatively. If I can't use provocative language, then I've effectively been neutered as a writer.
And moving further along the slope, what stops people from banning unpopular but valid opinions? What's stopping the grand arbiters of censorship from declaring the President (or any politician/party/idea) beyond critique? You could try to put careful laws in place, but once you do that you're setting precedent for outlawing more and more speech. What starts as a campaign to keep the mouths of the citizens clean and decent could very, very easily result in stifling dissent. I think everyone can agree that is a very, very bad thing.
Moving past the slippery-slope, we get to "Speech is a privilege, not a right." I can't think of any new way to combat this other than to say, "Says who?" Every document I know of (which I will admit is only the UN Declaration of Rights and the US Bill of Rights) explicitly lists freedom of speech as a universal, unalienable human right. Saying that speech is a privilege is pretty silly when it's so universally regarded as a right.
Moving on to offensive speech. No counting the slippery-slope arguments against restricting offensive speech, I only have one left: No one has the right to not being offended. I'm not certain where this idea came from, but it's flat-out stupid. If I say something that offends you, have you not considered that it might be your problem? If the offensive remark is baseless, then you can dismiss it out of hand, but if the remark has a basis in truth, then perhaps you need to reconsider your beliefs. For example, offensive racial remarks speak loudly about the person saying them. However, offensive religious remarks tend to speak loudly about the religion (or at least that's my view).
People sometimes forget how powerful a tool indignation is. Some of the best, most powerful, and most poignant works are offensive or controversial, and that's precisely why they're so powerful. TV shows like South Park use ridicule as a tool to point out flaws in people and organizations, and it works. Taking that away would kill an entire means of expression and argument, perhaps the most effective one.
JeNn mentioned Islamic extremists being inspired by acts against their religion, and perhaps they are (however, extremism is built into Islam itself, and I very much doubt that the actions of individuals in the west inspire radicals in the Middle-East). But if they are, is that the fault of our speech? Should we kowtow to their demands? Again I refer to South Park, that did a brilliant two-parter on exactly this topic:
Woman: Mr. President, we're awaiting your orders!
Kyle: Sir, just think about what you're doing to free speech!
Cartman: No! Think about the people who could get hurt!
FOX President: Ah... I don't know who to listen to!
Cartman: Okay, I'll make it easy for you. [pulls out a gun and aims it at the president] Pull the Mohammed episode, now!
FOX President: Okay, I'll listen to you. [gets back to the phone] Julie?
Kyle: Noo! Wait! You can't listen to him! He's a lying deceitful monster who only wants Family Guy off the air!
FOX President: But he has a gun.
Kyle: You can't do what he wants just because he's the one threatening you with violence!
Cartman: Shut up, Kyle!
FOX President: I can't be responsible for people getting hurt. Especially me.
Kyle: Yes, people can get hurt. That's how terrorism works. But if you give into that, Doug, you're allowing terrorism to work. Do the right thing here.
Cartman: Give the orders to pull the episode, Mr. President!
FOX President: I shouldn't even be in the office still. It's supposed to be half-day Friday.
Woman: Mr. President, thirty seconds to airtime. What do you want us to do?!
Kyle: Do the right thing, Mr. President.
FOX President: How about I allow the episode to air but, just censor out the image of Mohammed again.
Kyle: I wish that was good enough, but if you censor out Mohammed, then soon you'll have to censor out more.
Cartman: No gay speeches, Kyle!
Kyle: If you don't show Mohammed, then you've made a distinction what is okay to poke fun at, and what isn't. Either it's all okay, or none of it is.
Woman: Five seconds, Mr. President! [the programmer J. Walker has his finger hovering on the button]
Kyle: [softly] Do the right thing. Show Mohammed. [Cartman still has his gun on the president] Do. The right. Thing.
Woman: Mr. President, we need a decision now!
FOX President: Family Guy goes on air as planned. Uncensored.
This has been quite long. Perhaps I haven't addressed everything, I probably can't. But I hope that I've convinced some people that free speech is not a privilege, or even just a right, it is a necessity. If you live in society where your speech is restricted in any way, you do not live in a free society. It's just that simple.