The real problem is that both those extremes contribute to a system in which we believe a similar thing could never happen again by viewing them and their actions as distinct from us and what we are capable of, when there is no distinction. Closely related to the maxim that those that do not know history are doomed to repeat it is that those that view themselves as distinct from history are also doomed to repeat it. :/
Does anyone actually know what Godwin's Law says these days? I rarely see anyone mentioning it correctly.
Also Mr Godwin himself has come out and said "Call them Nazis" which somewhat voids the whole "Ooh, Godwin" nonsense.
Even the more benign uses of the term probably have some eroding effect on its potency, even if small. "grammar nazi" comes to mind. People sometimes refer to themselves that way somewhat affectionately. We don't see people using "pedophile" the same way. I can't say I think Godwin's original complaint was wrong.