Burning the Atheist blasphemy should not inhibit the Nativity scene in any way. The Nativity represents true religion while the Atheist statement is falsehood and error. Error has no rights.
But it is most certainly true that Government has no place in dictating which is “true religion” and which is “blasphemy”. Because if it does, it won’t choose the way we want it to.
Christianity comes out way ahead when matched against the ignorant words of the Atheist. It doesn’t need to be defended by destroying the sign, or silencing the critics. That is for lesser, false religions.