When it comes to the First Amendment, people get pretty animated.  But as you correctly point out, NSI and other registrars are in a unique market where the shear volume of domain name registrations makes it very difficult to apply policies with any consistency.  And at some point, black and white becomes a very grey area where the policies getting harder to apply. 

Companies such as NSI and other registrars are and should be able to create their own policies concerning the use of their services.  The market will provide alternatives base don demand.  T

here are certainly registrars out there who could care less what content goes on your web site.  As long as there are alternatives, a knee-jerk cry of censorship will remain unfounded.

Companies such as NSI and other registrars are and should be able to create their own policies concerning the use of their services.

By and large, that is correct. 

However, what NSI is doing in the case of eelam.com is quite literally illegal.

The LTTE is on the OFAC SDN list http://www.treas.gov/offices/enforcement/ofac/sdn/sdnlist.txt, and the identified registrant, “TCC” in Paris, France is the Tamil Coordinating Committee:

http://www.priu.gov.lk/news_update/features/20001004British_charities_fund_terrorists .htm

The US State Departmentâs Global Terrorism report lists the World Tamil Association (WTA), World Tamil Movement (WTM), the Federation of Associations of Canadian Tamils(FACT) and the Ellalan Force as known terrorist fronts of the LTTE. One of the constituent organisations of the Federation of Associations of Canadian Tamils(FACT) is the Tamil Eelam Society of Canada. (TESOC).

In Sweden and several other European countries, the front name of the LTTE is TCC, (Tamil Co-ordinating Committee.) The Swedish office of the LTTE is located at Glomminge Grand-25, 3rd Floor, 16362 Spanga, Sweden. The British Charity TRO has its office at Glomminge Grand - 29, 1st Floor, 16362 Spanga, Sweden.

It is the OFAC regulations which caused Enom to recently de-activate a number of domain names utilized by a Spanish travel agency in connection with travel to Cuba.

GoDaddy provides registration services for the following:

AL SUNUT DEVELOPMENT COMPANY (a.k.a. ALSUNUT DEVELOPMENT COMPANY),
No. 1 Block 5 East, Khartoum 2, P.O. Box 1840, Khartoum, Sudan;
Website www.alsunut.com (Sudan);

...in violation of the Sudan sanctions program, and Enom remains the registrar of record of another Sudanese state organ:

GIAD AUTOMOTIVE COMPANY (a.k.a. GIAD AUTOMOTIVE AND TRUCK; a.k.a.
GIAD AUTOMOTIVE INDUSTRY COMPANY LIMITED; a.k.a. GIAD CARS & HEAVY
TRUCKS COMPANY), Gazera State (40 km distance from Khartoum), P.O.
Box 444/13600, Khartoum 1111, Sudan; Website
www.giadmotors.com/giad_auto.html [SUDAN]

These Sudanese organizations made their way onto the OFAC list due to their participation in genocide which, again, is not likely to find its way onto the list of ICANN priorities anytime soon.

You see, there are people using the internet to infringe trademarks.  What’s a few dead villages, more or less, in Africa?