That's fine, as I don't think the folks you are arguing against are saying "never".
When someone wants to do the serious, thoughtful, sensitive Schindler's List of RPGs, we can talk about that. But so long as it is a cheap, "Well, the PCs need to fight someone, so let's put in an analog to the Holocaust just so we are clear it is EVIL, folks are going to respond as if it is cheap.
I am about to begin my two days of gaming for the weekend, so this might be my last contribution to this discussion for a bit.
I do think that the more specific and recent the thing you are talking about, the harder, the more challenging, the more likely it is to provoke (though not always). I worked in a kosher bakery when I was younger (which was my way of connecting more with the Jewish side of my family: my father's family is Jewish). We had a regular customer who was a very gentle old man who seemed lonely and liked to chat for a while, and I quickly learned he was a survivor. He even talked about it with us. That had a pretty profound effect on my worldview, in a number of ways. I don't think you can meet someone like that, hear their story and come away the same as before. And that impacted how I might be wiling to handle the material creatively. I would never personally want to publish anything that deals directly with the holocaust itself (I don't see a problem with doing so, I just wouldn't want to). But I am comfortable dealing with it through analogy, and have done so, and part of it for me was trying to understand why people even do that kind of thing in the first place.
I think my point here was that Falkovnia isn't Schindler's List. It is pretty far afield from that, but we enjoyed it nonetheless. I prefer a creative landscape where both those approaches would be possible and people can choose to engage or not engage them as an audience how they see fit. I know plenty of people who had the opposite reaction to us to Falkovnia and I think that is entirely fair.
I think there is also the topic here of the specific and the general. On the one hand you might have things like specifically alluding to or invoking the holocaust in a fantasy setting. And this might be handled in a number of ways and with a variety of tones. There are places where I would have a personal limit on that, but the limit would not be using it to make clear the villain is evil (that is probably a pretty thin and uninteresting use, but I don't take umbrage at it). Then there is genocide more broadly, which is something that I think is fair to include in a fantasy setting. Again, I will have lines (I wouldn't want to see someone use it to promote anti-semitism for example). But I also think it is important to not leap to conclusions when I see controversial content in a movie, game or book, and to try to understand the aim of it, what the creative vision was, and to have an honest emotional reaction to it (which might mean enjoying a schlocky fantasy film where the bad guy is a genocidal maniac----or finding the 90s version of Falkovnia compelling and evocative at the table).
Genocide is something that has happened. It is tragic, horrific and puzzling. So I think it is natural for people to want to explore it in creative venues.