I agree with you. Following every law is neither practical and in the case of censorship even counterproductive.
I just wanted to point out that the reaction of the court isn’t as entirely pointless as it may seem on first thought.
It's up to the German courts/government to deny access to sites that break their laws, not try to impose their law on people outside their jurisdiction.
Likewise, Microsoft has long had problems with pirated versions of Windows. Further, DVDs and CDs....
The general response from US courts was, "eh, what can we do?"
If Germany's laws must be applied to a US business, then the US is prima facie not sovereign.
And I think you’re right to do so!
Honestly, regarding the whole case, I think the court has erred in accepting the publisher’s argument that Project Gutenberg is a valid target for a lawsuit in Germany.
If the publisher wants the books removed it should sue in the US, if it wants to prevent access from Germany it should seek another local remedy.