I am in principle firmly in favor of Muslims being permitted to build a mosque two blocks from Ground Zero or anywhere else zoning laws permit.
I'm also fearful that building the mosque there will result in violence. Lunacy has become a major growth industry in America.
My solution is to use the proposed mosque site for another, related purpose. Use the space to display a large, elegant sculture (or another suitable symbol) commemorating Muslim contributions and good will to America's life and ideals. It could be a striking monument of sorts to all those American Muslims who have acquitted themselves so well as citizens of this country.
Then build the actual mosque somewhere else.
Nobody would have to lose face, a Muslim presence at the scene could be preserved and violence could be averted.