This guy is walking the streets because whilst his opinion is the Torah permits killing non Jews he hasn't actually gone out and killed anybody has he? Do we want a Soviet style police state where you can be arrested because your opinions are not inline with state policies. The fact he is still running around and allowed to speak his mind is something Israel should be commended for because it says this is a country where we allow freedom of speech. Rabbi Lior is just one man with some radical views that he preaches but in all countries on all sides of the political and religious divide you get people with radical opinions but that doesn't mean you lock them all up for it.
AG examines probes deal by new police chief Hirsch's security firm (Haaretz)
from the article: A racist, messianic rabbi is the ruler of Israel