Bret, I certainly don't want to be insensitive on this subject, and if I am in any way, I apologize in advance.
I have watched Mahathir's antics for a long time -- starting in Singapore in 1985. He has always been anti-Semitic, and he clearly uses this to advance his own popularity among radical Muslims (while the more enlightened ones, to their discredit, have looked the other way).
With regard to Krugman's statement, though, I'm not sure I see the error in it that you and the letter-to-the-editor writer see. To me, it seems that Krugman is simply pointing out that Mahathir was being "hateful" for purposes of covering "his domestic flank." I didn't take the initial question in his statement to mean that Krugman didn't believe Mahathir was being anti-Semitic. He's simply answering the question -- and, in fact, agrees that Mahathir was being so. I don't think his words were in any way meant to excuse Mahathir -- only to explain his motivations.
I did a few minutes of research on the internet, but couldn't find anything about Krugman's own religious upbringing. It seems like something I once read suggested he was Jewish. But, I'm not sure about that.
Anyway, perhaps Krugman should have been more clearly condemning of Mahathir's statements. They certainly appalled me when I read them earlier this week.
Regarding other provocative postings you've made, I've been too busy to do much responding the last several days. I'll get to them eventually...