UPDATE: Eugene Volokh thinks the suicide-bomber costume is no big deal: It's Halloween, after all. Hmm. Would a university President really pose for photos with someone in a Klan outfit, or wearing blackface? I find that hard to imagine. And if not, why is the suicide bomber outfit OK?
The Nazi analogy is, I think, a poor one. Nazis are a vanquished former enemy. Suicide bombers are a current enemy. Could that be a relevant difference?
ANOTHER UPDATE: Eugene responds: "I would likewise defend someone who came to a party as a Klansman. Same theory -- Klansmen are scary; Halloween is about scary costumes; Halloween is not about endorsing the characters you're dressing as."
I remain skeptical that a Klansman costume would be received in the same fashion, or that an Ivy League university President would be comfortable being photographed with someone wearing a Klan costume.