What a lot of people defending Hairs actions are neglecting is that a major part of being an elite umpire at the top-level is in your ability to not only get decisions right, but to manage people and situations.
It is in this aspect where Hair has failed abysmally on this occasion. While it is all very well and good knowing and applying the rules strictly at lower levels where the stakes are not as high at the elite level where money, politics and sponsors play such a major role Hair must have realised the consequences his actions were likely to have.
The ICC removed him from the panel not because he was wrong in his decision making, in fact they confirmed he was right to both dock Pakistan the runs and to call the match off under the rules, but rather because someone trusted with the stewardship of the game at this level should have had the ability to manage the situation far better than he did. The PCB's accusations of racism are ridiculous, but no more so than Hair's. He's gone not because he made the wrong decisions, but because he did it in the wrong way.
I don't seek to defend the actions of the Ul Haq in anyway, he was in the wrong and rightly punished by the ICC, likewise Hair's technical decisions were also supported by the ICC as being within the rules of the game. That he was subsequently removed from the panel is merely a manifestation of the fact that the member countries did not have confidence in his judgement his ability to manage something as important as a Test match. (The fact that I believe that his technical ability is distinctly below average is neither here nor there)
PS - on the chucking issue raised above. At the risk of rehashing an argument that has been done a million times; I find it hilarious that someone would hold up his calling of murali as a shining light of his abilities as an umpire. Yes, murali chucked under the rules at the time. What they neglect to mention is that the rules were not changed to accomodate murali but rather that they were changed because all bowlers chucked under the old rules (except for over the wrist spinners - but you try telling Ross Emerson that).
The flaw was not in murali's action but rather in both the rules as they stood and also in the umpires in that they were unable to detect that these bowlers were all "chucking". So don't praise Hair's actions as a sign of courage and a display of his visionary ability to tell that murali was chucking when so many others couldn't. All he saw was an action that was different from the norm, and an opportunity to apply the letter of the law, while (like the rest of us) he blissfully allowed a plethora of other "chuckers" to continue around him.