Your defense of your anti-Mormon supplement is de jure sound and de facto ridiculous. While that obnoxious Christian sect has a right to advertise its nutty bias, I assume you also have the right to refuse the advertising. That you didn’t shows both a lack of feeling and a lack of judgment on your part. Stop trying to use the First Amendment as a shield for your blunder. It doesn’t matter whether you condone this anti-Mormon claptrap or not: you distributed it. That makes you no better than the German newspapers that printed Nazi anti-Semitic diatribes or the southern newspapers that printed racist Klan propaganda. Don’t kid yourselves — you are complicit here. Would you have included an insert that was blatantly anti-Semitic or anti-black or anti-gay? If so, then you have even less reason to be proud of yourselves. You are not a public institution; you are a privately run business. And you are extremely lucky that this did not create an even bigger firestorm than the one you started.
BTW, I am not a Mormon, nor am I anti-Christian. But I am anti-hate, and that is what you were disseminating in your paper. There is no place for that in our community.