Shalom aleichem.
I don’t think anyone here is disputing the historicity of the Holocaust. Certainly I am not.
The Resurrection is the good news of man’s triumph over death in the divine man Jesus. It is the indispensable basis of Christian faith and hope. The Holocaust is equally real, but no faith relies upon it. Jews would have continued to be Jews if the Holocaust had never happened.
In politics (and this is politics), appearance is everything. Like it or not, whether it was the intention or not (and I know that legitimizing denial was not the Pope's intent), accepting Williamson back into the fold will be read as a tacit acceptance of those who deny the slaughter of six million Jews by those who are in denial, not just by the Rabbinate. Since the current stance of the Palistinian Authority, Hamas, Iran, and most of the Muslim world is that the Holocaust never happened (though they think it's a good idea) and therefore Israel is illegitimate, the Pope's appearance of acceptance represents a danger to Israel's appearance of legitimacy, and therefore to her continued survival.
The Rabbinate would be irresponsible if they let this slide without the strongest possible protest, especially since the Vatican has been trying to position herself as a neutral arbiter of affairs in the Holy Land for several decades now.
Shalom.