I rather like Tweet Free or Die Hard!
Simple! What you do is up to you as long as you respect their free speech rights. However... since evidence shows that they thrive on attention they get... probably the best idea is to make them irrelevent... act like they don't matter and completely ignore them.
If you pass a protest of theirs on the street, bring a book or
get in a very boring conversation with a friend and don't even look at them.
As long as they are not violent and only the attention whores they are today... it should be safe to make them irrelevant. And since Fred Phelps apparently feels he has to be the center of attention... there is nothing that should more effectively remove his power or more infuriate him than having his absurd and hateful speech completely ignored.
The first amendment demands we let him talk... it DOESN'T demand that we have to listen to him. Plug in an ipod and zone out. lol