The website is being hosted by a private company--Rackspace--which has a vested interest in its own self image and no obligation to host a site on its privately owned servers unless it has a contractual obligation to do so. Doesn't matter what loophole they put in their contract, they could have put "if we decide we don't like your site we will take it down," if they wanted, and if this site is indeed in violation of their contract, however loopholey it feels, they have every right to take it down. Nobody has a right to have their site hosted on someone else's server.
That said, the media is making a non-story a story. This is one crazy guy with his 50 crazy friends burning some books. He isn't a spokesperson for any organization other than the 50 crazy friends. If the Pope or Billy Graham or Richard Dawkins or some political figure decided to do this, then it might have merit as a story, but as it stands this is a very tiny molehill being made into a really huge mountain.