I didn't see the Icarans as neo-Nazis, but I wouldn't have minded if they were. After all, the Nazis were only the most famous of many historical (and contemporary) totalitarian regimes, and it would be ludicrous to pretend that such a society couldn't arise again in some fictional future. Philip K. Dick even based one of his novels ("The Man in the High Castle") on the premise that the Axis won World War II and conquered the globe; the book won a Hugo Award. So as far as I'm concerned, Starhawk's defense of his protagonists is unnecessary.
However, his essay on Icaran society does raise some interesting points. I'm sure Starhawk sees his Icarans as genuinely happier and better off than most citizens of 21st Century Terran democracies, yet to this cynical reader the images he invokes are reminiscent of Nazi or Stalinist propaganda films, or maybe the incessant telescreen indoctrination of "1984": smiling, excruciatingly healthy schoolchildren; happy, prosperous workers; mighty dams, soaring bridges, clean cities, amber waves of grain, and so on. I'm reminded of a smiling Hitler awkwardly patting a schoolgirl on the head, a smiling "Uncle Joe" Stalin smoking his pipe, or a smiling Saddam Hussein with an apprehensive little hostage boy.
Above and beyond the "too good to be true" factor, I find it hard to reconcile the Icarans' apparent prosperity (and military might) with the low level of automation Starhawk mentions in another thread. Without the multiplier of automation, it's difficult for a worker to produce much more (and often less) than is needed for himself and his family. There may be full "employment", but it's at a subsistence level. A textile mill may put a thousand hand weavers out of business, but it also frees them to become doctors, teachers, soldiers, scientists, and other "unproductive" (in the material sense) professionals.
Finally, as illustrated by the section on crime and punishment ("...there are no lawyers for criminal cases as there is no real need for lawyers because the evidence is always correct..."), the Icaran government has no checks and balances on its power--yet the abuses of power prevalent in every other human totalitarian society are curiously absent. In other words, I just don't buy the whole "benevolent despot" thing. The idealized portrait of the Icaran rulers just adds to the whole "propaganda film" impression.
Of course this is Starhawk's story and he's welcome to build his background however he likes. In fact I applaud his efforts to construct a novel good/bad future civilization, and will continue to read the story despite the perceived inconsistencies. In my limited reading of science fiction, I often find the whiz-bang "science" more believable than the social aspects of a futuristic story; it's a rare author who can come up with a plausible, self-consistent social setting for his/her characters. Enjoying science fiction always requires a certain "suspension of disbelief"; it's just that I'm usually more willing to accept the contradictions in science than the inconsistencies in human behavior (I'm not a scientist, but I've been immersed in human behavior for several decades.)
So bring it on, I say! Warp points? Sure, no problem. I-lasers? OK, whatever. The accused is always guilty? Uh, wait a minute...