This looks tough, but it is in fact a display of Papal weakness on several counts.
Sign of Weakness #1: Letting the media control the message.
The original issue in the excommunication, remember, was that Williamson was part of a group whose episcopal ordinations had been carried out over the express objection of John Paul II. Said ordinations were apparently what canon law would call "valid but not licit." That is to say the form of the rite was correct, but its intention was not. The difficulty between the Vatican and the SSPX is not, and has never been, the Holocaust.
But of course Holocaust denial is an enormous problem -- it offends Jews (not to mention all other reasonable people), violates German law, and risks igniting a firestorm in the secular media. Having already alienated Muslims worldwide, the Pope doesn't need to piss off the Jews as well. So he is demanding this disavowal not in response to any canonical or theological imperatives, but in response to catcalls from the public.
Sign of Weakness #2: Not doing your homework.
Benedict claims he didn't know Williamson was a Holocaust denier, and he is certainly telling the truth. But a more circumspect pontiff would have investigated the SSPX personnel better, seen what was coming, and let them continue marinating in their own vitriol.
Sign of [Massive] Weakness #3: Rewarding disobedience.
Most seriously, at least for the Roman Catholic faithful themselves, is that the new declaration links Williamson's obedience [regarding the Holocaust] to his future ability to serve as a bishop. Um, hello? His service as a "bishop" is itself a sign of his disobedience. His orders may be valid, but a stronger pope would never recognize them as licit. Instead, a strong pope would restore Williamson -- and the other "bishops" involved -- to communion with the Church, and then exile their disobedient butts to a monastery in Nigeria. Holding out the possibility that these "bishops" will ever serve as such with the approval of Rome is a betrayal of John Paul II.
But, on a positive note -- and one you have to read to the very bottom of most news articles -- the recent declaration also stipulates that the SSPX must accept all the teachings of Vatican II . This is the real heart of the matter, and insistence upon it is a sign of strength.
Incidentally, press coverage of this, while plentiful, has been astonishingly bad. It might well lead casual readers to believe that the entire flap is about anti-semitism, which it obviously is not. The ABC News story linked above is especially bad. But you know whose article gets most of the main points across, thoughtfully and accurately? Brace yourself: it's Al-Jazeera.