It is also promising to include a memorial to the victims of 9/11, according to the Wall Street Journal.
So what's the problem?

If they were building directly on top of the building sure there might be a case, but two blocks away? I honestly don't see any issue here. And if there is an issue, how far away would you consider to be the distance at which mosques should be built? 5 blocks, 10 blocks, outside of New York altogether?