There's lots of debate over what, if any action to take regarding the Olympics i.e. boycott the whole thing, boycott parts of it, use it as a protest vehicle, etc. I don't think anything done there would change Chinese policies (did past Olympic boycotts really change anything?). To me that creates a certain freedom to go ahead and piss them off if you feel like it, and let the diplomats wring their hands and sort it out. That seems to be what's happening with these protests, and good for them. I do wonder what kind of ivory-tower thinking led the IOC to award China the Olympics in the first place. I know they did it quite a few years ago,but how could they not see this coming?
I see this as an opportunity for a western leader with the guts to use it; to inform the Chinese that,unlike them, you are accountable to your citizens for your actions. Unlike them, you must not only tolerate but seriously consider what is being said by those citizens, which is that the Chinese government is a barbaric totalitarian state. That if the Chinese can offer any rebuttal beyond "No we're not, and it's none of your business. How dare you!" you would be happy to hear it. Unfortunately, I don't see than happening. The Chinese have money, and it's money that matters.