I think her belief system is hopelessly wrong. But her beliefs are honestly held and I accord her the same rights not to provide services to homosexuals that I want for myself regarding Nazis.

That's why I phrase it as "where do you draw the line?"

Religious beliefs?
Political beliefs?
Lifestyle?
Prior criminal activities?
?????

Rich, you are missing the point. If the report is accurate, she violated the university's policy. It's as simple as that.