There was a discussion of this on ABC's roundtable on Sunday morning and concensus was that at this point it cannot be built elsewhere because, while superificially one could argue that it is a nod towards "accomodating" the concerns of those offended, the problem is that it has been turned into a political football by the right hatemongers and so, to build elsewhere would send the message that such groups have veto power over the First Amendment.
And so now, ironically thanks to Newt, Limbaugh, Palin, Beck, and so many others, building it elsewhere undermines the very religious tolerance that those people pay lip service to.
Also, the Imam's wife was on the show earlier and explained that his comment right after 9/11 about the U.S. policies having some blame for 9/11 has been taken out of cotnext by the right wing hatemongers and that, if you watch his entire interview, he is in context discussing the CIA having armed and supported Bin Laden.
Now, we know that the right wing hate mongers have a history with that, especialy recently. She also had on with her a woman who was cofounder/organizer of a Jewish Community Center nearby and she welcomes the Muslim faith center there where they want to build it. Says long before the controversy that they had been working together to share ideas and concerns for how best to have such centers -- Jewish and Muslim -- near each other and to work with one another.
That was a good thing to hear for the future of the world. Of course, such understanding and working together falls on deaf ears for the ignorant, like Newt, Limbaugh, Palin, Beck, etc.