In his films, Lars Von Trier uses difficult and contentious elements as a lightning rod to bring to the surface hidden elements of ourselves. It's no different in his interaction with the press and public. And in this case, the reaction to the comments he made is far scarier than the comments he made.
It should also be noted that since, he has said "If I have hurt someone this morning by the words I said at the press conference, I sincerely apologise. I am not antisemitic or racially prejudiced in any way, nor am I a Nazi." It was an extension of the ethos presented in his film The Idiots challenging the establishment through provocation.
The recent decision by Cannes to expel him and label him a "persona non grata" is extraordinary and marks a downturn in the legitimacy of the festival itself. For some time it has been in decline, feeling more like a tradeshow than any sort of festival with artistic merit and this latest decision to expel one of its contenders doesn't sit right with its heritage as an open and forward thinking forum.
Von Trier's work is provocative and at times uncomfortable revealing truths that some want to deny, but he always serves up something to think about and his latest comments reflect his work in that it has brought to the surface reactions based on indoctrination rather than thought. I'm sure many who have spoken against him are just answering an inner call to prove themselves good people ("I don't like Nazis!") while actually feeding a fascist, mob mentality without even realising it--good intentions paving the road to hell.
People like to think in black-and-white and prefer it if people say what they mean, but there are gradations and using language to provoke either by sarcasm or tongue-in-cheek misdirection is valid. It's just a shame that the organisers of Cannes lost sight of that.
Cannes Bans Von Trier After Hitler Remarks (New York Times)
Witch Hunt or Wise Move? (Routers)
Cannes Film Festival Bans Lars Von Trier (Guardian)