Where do we draw the line on free speech?

Perhaps there is no moral highground on this cartoons issue. But faced with the choice of living under Islamic law or having complete freedom of speech, I choose complete freedom of speech categorically. Some would disagree with me about this.

I'm not saying the 'behead those who mock Islam' placards are OK, but are they really THAT bad? If someone had a 'hang those who commit treason' placard, would that be acceptable?

If we believe the protestors, the police present didn't complain about these placards, although the police now deny this - for the obvious reason that it makes them look silly. Personally I believe the protestors are telling the truth, (because the police must have seen the placards and did nothing about them). For that reason I don't believe the protestors should be prosecuted.

I hear there are now cartoons being published that mock the holocaust and one that shows Anne Frank in bed with Hitler. I'm probably not going to publish these because from what I have seen of them, I find them unfunny and offensive. So am I being hypocritical because I published a Mohammed cartoon and not these?

I published one of the Mohammed cartoons (the run out of virgins one) because;

1. I didn't consider it offensive.
2. It wasn't in my opinion in anyway racist.
3. I found it mildly amusing.
4. I wasn't breaking the law.
5. I thought it might be interesting for readers to see the cartoons that were causing all the furore, so they could make their own minds up (which is also why I linked to the rest).
6. It was a massive news story that I found interesting.
7. People can find offence at anything and the principle of free speech is more important. People do not have a right not to be offended.
8. And finally because religious bigots were telling me I couldn't publish them and I knew this was threatening free speech. The more these cartoons were published the better, because it would be impossible for Islamists to kill us all.

This 'holocaust' cartoon escalation is quite obviously playground stuff. I don't object to the holocaust cartoons, in fact I think it is probably the best way for the Muslim world to vent their anger. I imagine the response will not be what they want. People in the West will vent their disgust at the cartoons but that will be it, it will be a minor issue. I doubt the Iranian embassy will be burned down over a few cartoons. And that is the difference between the West and Islamic society, which is why the West is a better society to live in.

UPDATE: Pubphilosopher has a fantastic insight on how it is the Dutch imams who should be prosecuted for publishing three extremely offensive cartoons of Mohammed that they forged themselves and were nothing to do with the Danish cartoons. They came up with these because they obviously realised the Danish cartoons just weren't offensive enough. One has to ask where was their 'respect' for Mohammed?

UPDATE2: Apparently old news this, but sandmonkey has the evidence that an Egyptian newspaper published the cartoons back in OCTOBER. Should Muslims now boycott Egyptian goods as well?