It sounds like, so far, the University of Colorado has it right. If he's canned, it should be for his fraud and plagiarism, not his inspeakably vile utterings (or character).

I have mixed feelings about what the eventual outcome should be. In the interests of academic integrity, the university should get rid of him (and I suspect that it will, and I hope not with a buyout). On the other hand, I think that in a just world, they should have to live with him as punishment for hiring him in the first place, and as a constant reminder to be more careful when granting tenure.

In a just world, Churchill wouldn't have been given tenure in the first place.

His offensive slurring of the September 11, 2001 victims most certainly could be used to punish him, if he said them on campus, as a representative of his University.
If I was employed by a company and used offensive racial or religious slurs, or even spoke rudely, I would certainly be subject to disciplinary action. As far as I know, under the law, there are no special protections for schools over regular businesses.

Don't know about "just" world, but in a sane world, Department of Tribal Propaganda and Whining (excuse me, "Ethnic Studies") would not exist in the first place.