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Please note that I am not defending the ethics of people who tell deliberate lies, I'm just saying "Stolen Valor" was an over-reach.
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Agreed. Remember, they ruled that Westboro Baptist had the right to spew their drivel, and there was something about those Illinois Nazis who so annoyed Elwood back in the day.
The 1st Amendment protects speech, not just the speech people like.
That said, there are exceptions for things like libel and slander, and I can understand a finding that deliberate mistruths merit a slightly lesser degree of protection.