The Republicans clearly think they've hit paydirt thanks to President Obama's support for freedom of religion (even if he did amend his ringing 1st Amendment statement to say it should not be read as an endorsement of the wisdom of a Muslim group's decision to build a community center a few blocks from Ground Zero.)
This article, with further reports on fired-up Republicans, has a small silver lining. Islamophobia seems likely to override homophobia this election cycle.
I also note a comment by Josh Marshall:
The fact that some of our most searing and for many of us some of our first experiences with Islam came in the form of a catastrophic terrorist attack by Islamic radicals creates a situation ripe for exploitation. And here we have it. We're in a midst of a spasm of nativist panic and raw and raucous appeals to race and religious hatred. What effects this will have on the November election strikes me as not particularly relevant. What's important is compiling some record of what's afoot, some catalog for understanding in the future who was responsible and who was so willing to disgrace their country and their principles for cheap advantage.
Is there any reason to oppose the mosque that isn't bigoted, or demagogic, or unconstitutional?
As for how others might feel:
Some people say that tact or respect for the survivors of victims of 9/11 should dissuade these Muslims from building their center on this particular spot. This argument avoids both the constitutional question and the issue of bigotry. It says your concern is protecting the feelings of people whose feelings deserve protection, whatever those feelings might be—even if those feelings, in some other person or some other situation, might seem bigoted.
In First Amendment jurisprudence, there is a concept known as the "heckler's veto." Is it OK for the government to silence a speaker whose speech so offends some listeners that they may turn violent? The answer is generally "no." Except in true emergencies, the government's duty is to protect the speaker, not to silence him. The parallel is not exact, of course—no 9/11 families (that I know of) have threatened violence—but the principle is similar: opponents of someone's First Amendment rights should not get a veto over their exercise.
UPDATE: Here's a map and photo slideshow to give you a feel for this "hallowed ground" that has suddenly become bigger than the Ten Commandments, Pledge of Allegiance, Flag Burning and Gays in Military.