Well, I thought that I would throw my two cents in here before this thread is locked. (Come on guys, stay civil, huh?)
I actually did a lesson that discussed the Holocaust as a subset of the lesson content. I should mention that I work at a public middle school and that the head of my English department told me specifically that because I see my third graders twice a week, it was fine to do one lesson per week on whatever subject I choose. So, earlier this week we had the grammar point "I hope..." and I built on that today by using the phrase "I have a dream..."
We discussed who Martin Luther King Jr. was and a little bit about civil rights in America. I showed some video from the "I have a dream..." speech and then we started talking about the movie Freedom Writers (with Hilary Swank from 2007). I discussed with them how Erin Gruwell related the Nazi Holocaust to the gang and race problems her students were facing in California. We also watch the "Dream" video by Common and Will.I.Am.
I think that Americans and Europeans have a unique perspective on this time in history, and it is not improper to offer a lesson on it, particularly when my school asks for lessons specifically pertaining to American culture and history. I did not show any gruesome pictures or anything, but in the video there were some sketch depictions of different things: the gates at Auschwitz, for example.
Neither my head English teacher (who was present in the class that day) nor my co-teacher said anything negative about the lesson afterwards. When we were finished with the videos, we had the kids write about their dreams, relating to themselves and/or problems in Korea. (Example: I have a dream that North and South Korea will reunite.)
There is a way to do this content appropriately and a way to do it that would be absolutely inappropriate. But it's not all black and white.