For just about everyone who has addressed the question, the controversy has to do with whether Muslims ought to build a Mosque in the blast-zone of Ground Zero. Almost everyone agrees with President Obama that the owners of the property have a legal right to build it. Even so, most people who heard Obama's remarks thought he was endorsing the Mosque, rather than making a trite comment about the legality of the matter.
In this context it is interesting to consider the question of "strategic default"--defaulting on one's mortgage not because one cannot pay it, but rather because it is no longer an economically sound position. Megan McArdle takes the classic view on the question, saying it is, morally wrong and financially stupid. The first half of that comment is relevant here. McArdle believes that a moral man pays his debts. Failure to pay one's debts when one has the means to do so is a form of fraud, or perhaps theft. Many Americans, however, don't see it that way. They simply think that the law allows it, and, therefore, they are perfectly entitled to do it.
I suspect that in both of these cases we are seeing nature at work. It is natural, and I would say inevitable, for people to conflate what is right with what is legal. Everyone allows that there is daylight between what is right and what the law allows or requires. On the other hand, to hold that the legal and the moral are completely separable is to wish for that which cannot happen among men. The law is by nature a moral teacher. It cannot be otherwise so long as we remain human.