It's fucking bullshit, through and through.
I've not been particularly impressed or interested in Hatred personally, but I had no issue with it being made. Seems to me that Valve fucked up bad. Despite the positive reception by the consumer base (which is the whole fucking point of Greenlight in the first place), they chose to distance themselves from the controversy of Hatred by banning it. It's a business decision, but it's also cowardice.
People are arguing that Postal is up on Steam and so Hatred should be allowed up there as well, but they often miss the point - Valve clearly didn't remove the game because of the violence, but because of the controversy. Because so much of the gaming press has written up a storm about the attrocity of Hatred's mere existence. They want to play it safe, and not be remotely related to that whole thing. Postal, on the other hand, is safe. Oh it had its controversial period, but that has come and gone, and it's now seen and judged as the video game that it is, not as a vehicle for controversy. Nobody would really throw a fit or campaign against something like Postal or Postal 2 in this day and age.
It's a disservice to everyone involved, too. It's a disservice to the consumers who voted YES for Hatred on Greenlight, and more importantly - it's a disservice to Destructive Creations, an indie developer for whom being published on a huge platform like Steam can mean the difference between success and failure, yet have been effectively banned from the platform just because there's people talking shit about it.
It's a shit move, and I hope those guys pull through and find other platforms to release on. I saw people voting for it on GOG, so maybe they can get picked up on there:
http://www.gog.com/wishlist/games/hatred