There is a very interesting discussion thread on religious exemptions at "Dispatches from the Culture Wars".
As I see it, we need to keep in mind what freedom of religion traditionally is, namely, one form of freedom of conscience, something to be directed by reason and conviction rather than force and violence. Since the dictates of conscience are virtually by definition morally binding, forcing people to do things that violate their conscience, when you don't have a clear and adequate justification for doing so in that case is a very serious moral offense. But it's not just morally bad; it's politically dangerous. When people being forced by the government to violate their consciences is not clearly defensible according to widely accepted principles, there is trouble brewing in the polity. Even more importantly, for governments to do much to violate the consciences of their citizens is radically contrary to the very principles of a liberal democracy, in which it is the freedom of the people, not the authority of government, that is the foundation of the state.
But, of course, not all possible religious exemptions are exemptions that are necessary (or even always very useful) for preserving freedom of conscience inviolate. One of the common topics in the comments discussion is over the provision of services: If you are providing a service S to the general public, do you have the right to refuse anyone who desires S and is willing to accept the conditions you offer to everyone else? Certainly not, I would say. And this makes a lot of sense. If a Catholic school provides the service Catholic education, and a Muslim parent were for whatever reason decide that his Muslim children needed a Catholic education, any Catholic school refusing to provide a Catholic education simply because the people receiving the service weren't Catholic would be in a clearly problematic situation. Similarly, a renter who offers his apartment to the general public, and is clear about the conditions, none of which in themselves violate any rights, is in the wrong if he refuses to rent to a gay person who meets the conditions, simply because he is gay.
But contrast this with a very different sort of thing, non-provision of a service for conscientious reasons. In this, regardless of whether the reasons are religion or not, I don't see that there is any defense for government intervention unless the people in question are themselves operating as agents of the government. If a Catholic school chooses not to provide a secular education to those who want it because the people involved could not do so in good conscience, it's absurd to say that they are violating any rights. This is not making an exception to providing a service; it is simply not providing a particular service, and there's nothing wrong with that. A pharmacy that refuses to provide contraception to people it classifies as promiscuous is clearly in the wrong, because it is making arbitrary exceptions to its general service; a pharmacy that refuses to provide contraception because it operates on the principle that contraception is wrong is simply not in the same boat at all (as some of the commenters note). I think a number of people are sometimes confused on this point because they fail to keep track of who is in violation of a right; a common objection to this rather common-sensical point is that sometimes this might mean that contraception becomes very difficult to get. If a doctor refuses to provide you a medical service he generally provides simply because of who you are, he has violated your rights. But suppose we have a country in which we officially grant everyone the right to good medical care. And suppose a rural doctor, exercising his right to mobility (along the lines of the right to mobility found in the Canadian Charter of Rights and Freedoms), moves to the big city where he can more easily feed his family, leaving the rural folk in dire straits when it comes to good medical care. This is a tragedy, but the doctor has not violated their rights, because he has simply exercised his own. However, rights are violated, or at least endangered, because the rural people officially have the right to good medical care. The problem is not one of the doctor's particular actions; it's a problem of distribution, and since the government has taken in hand to guarantee good medical care, it's the government that is violating the rights of the rural folk by failing to take steps (the very steps it needs to be taking if it is really guaranteeing the right to good medical care) to make it so that being a doctor in rural parts of the country is an attractive and feasible thing. And that's a different fish altogether, since the question then becomes not, "Should the doctor be exempted from delivering good medical care to the rural folk because of his right to mobility?" (which doesn't make any sense at all) but "What steps should the government take to protect the rights of all who are involved?". So in a case like this we need to keep track of who is violating whose rights. And in a case involving mere non-service, we'll find that in almost no case is religion even an important issue in evaluating the non-service, even where the conflicting freedom happens, incidentally, to be freedom of religion. It could be any other freedom and it wouldn't make much difference to the general principles involved.
And contrast both of these with another very different sort of thing, one that isn't itself provision of a service to a customer at all, e.g., a Catholic school preferring a teaching candidate over another precisely because one is explicitly Catholic and the other is explicitly not. Given that the service -- Catholic education -- is not in itself a violation of any rights, and given that the provision of that service is a freedom that apparently needs to be protected, and given that Catholic teachers is necessary for providing that service (which, it turns out, is the tricky thing to show), there would be very little justification for government intervention in this case. There really is no discrimination going on, in the bad sense of the term, because (1) no one has a right to be hired, only a right not to be arbitrarily refused employment for certain kinds of reasons; (2) in this case, not being Catholic is not an arbitrary reason, but is clearly relevant to the service provided; and (3) the government cannot seriously shut down the service in question. I've stated that rather starkly; in fact, I think cases of this type are much more murky than cases of the other two types, because it's hard to pin down how necessary the one action is to the freedom in question. For instance, despite what might at first seem to be the case, it's rather tricky to determine how necessary hiring Catholic teachers is to providing a Catholic education. Even assuming that the right to provide a Catholic education is a freedom that (assuming certain general education regulations are enforced) must not be blocked, is it really blocked if the school is required not to discriminate on the basis of religion at all, when the non-Catholic teacher is competent in the field in question and cannot be shown, or even reasonably suspected, to be likely to interfere with the school's provision of a specifically Catholic education? And what sort of standards would the school have to meet if we saw it in that light? There's a lot more room for controversy and debate here. I don't know of any clear way to handle these cases according to general rules.
There are probably lots of other kinds of cases I haven't considered. And that, I think, is the first step to getting clear about these religious exemption issues: don't assume that just because A and B are religious exemptions that they are the same type of case at all. 'Religious' is such an immensely vague term, and 'exemptions' are of so many different sorts, that we shouldn't pretend any one set of rules is going to cover the whole territory. Likewise, we shouldn't pretend that just because one type of religious exemption is dubious or unclear that they all are.
