Well it's important to keep the context in mind here: "the holocaust reference" in this case was a chart from the Anti-Defamation League making the case that normalizing seemingly minor bad behavior makes it easier to go on to slightly worse behavior, which now doesn't seem that different from what you're already tolerating, and so on, and so on.
https://www.adl.org/sites/default/files/documents/pyramid-of...
This is not a terribly controversial assertion, in and of itself. Was it a stretch to use it in this context? You could definitely make that case. (I've long been fond of the quip, "If you use a slippery slope argument once, you'll start using it everywhere.")
But I would argue that when DHH acknowledged the list making fun of 'funny names' was a bad idea, apologized, and promised to shut it down, he had the choice to stop talking at that point. He didn't have to publicly chastise the employee who brought up the Pyramid of Hate. He took positive steps toward putting out this fire, but then threw on a match of his own -- and then doubled down on that, publicly calling out an employee who kept at it.
So, if we're talking about DHH-the-manager, I would suggest he maybe didn't do the bestest job of managing here. He could have said, "yes, we'll take down the list"; instead, he went with "yes, we'll take down the list, but don't you think you're being a drama queen about it."