If I understand the Megaupload situation correctly, the crimes Megaupload and its executives were accused of were also illegal in the countries in which they were arrested. India's free speech laws are different from the US's though, so the same argument doesn't apply.

New Zealand also has a criminal copyright violation statute.

Which they might not have been violating.

And even if they were violating it, if New Zealand didn't want to pursue a case, why should America get the right to "World Police"?

Don't play daft. Mega was operating a business aimed squarely at the US market and built off the intellectual property of American companies. The US interest in seeing that case prosecuted is clear.

If NZ wants to alienate one of the world's largest markets, their largest military ally (and the guarantor of their security, particularly in their shipping lanes) to stick up for a foreign national running a criminal copyright conspiracy on their soil, they're free to do so. Don't get all huffy when they decide not to let that happen.