I found that story to be rather sad. While their signs were offensive, immature, etc., it shows how much our society is now choosing to trample over 1st Amendment rights in an effort to shield college aged students from being offended. I recently read an article about how professors now have to shield students from hearing material that they may find offensive or troubling in any way. This is really going to hurt us more than it helps us in the long run.
I'm not sure this falls under that category. Close, but not quite. We're talking about publicly displayed and intentionally offensive signs, not discourse or discussion. Standards for public decency are hardly a new thing, I wouldn't be allowed to paint a dick on the side of my house and claim the 1st amendment.
It seems pretty equivalent to something the local Pro-Life Vanguard did back when I was at the University of Delaware. They set up large, billboard-like posters with high-res photos of aborted fetuses on The Green, which is the main thoroughfare through campus and directly in front of a number of academic buildings. They were shortly instructed to take the signs down after a number of people complained.
Now regarding the constraining of academic discussions and shielding students, that's more a problem with biased faculty culture IMO. Rest assured the students can and do talk about anything and everything with other students, regardless of what the professors tell them. Another example from my almamater, we briefly had this mandatory, retarded diversity program that taught you could not be a victim of racism if you were white, regardless of circumstance, among other stupid ideologies. Naturally this garnered some controversy in the news and was quickly withdrawn, but among the students (of which I was one), it was simply and universally laughed at. It was that required thing we had to space-out through once a week before going back to our dorms to laugh at it and play mario kart.
Now by contrast, I read a few news articles and statements that portrayed it as Orwellian, oppressive, scary, damaging, etc. College students, despite stereotypes, aren't that readily pliable. The smart ones will see right through it and the dumb ones won't care. Same goes for information professors might display. So while I'll admit suppression of unpleasant academic discussion is a bad thing and should be fixed, I'd say its effects are pretty limited and somewhat embellished by the egos of educators. It likely affects faculty more than it affects students, particularly when Google can readily supply the rest of the story.