As a Duke alum, here's my 2 cents worth:
1.) The entire LAX team embarrassed themselves and the university by Hosting - in campus housing owned by the university and leased to the captains of the team - a party with exotic dancers. These are students who the university is paying their scholarships for and this was during the Lax season. We had tons of these "parties" at Duke when I was there, but they were held off campus in non-campus owned apartments and the university was not paying my education. Cancelling the season last year was the appropriate decision. I could never imagine the Duke basketball team hosting this type of party during the season on campus property. Coach K would never let it happen.
2.) Race relations between Duke and the Durham community has always been an issue. Duke is a university that has alot - more than 75% - of their students from outside of North Carolina. The campus is remote and does not interract with the local community as a whole. Alot of the student body is very wealthy and most of the population of Durham is not. The parking lot at campus looked like a BMW dealership. Duke employs alot of local Durham people, but there's not much interaction on a day-2-day basis and this creates a feeling of the haves-n-have nots in the community. As a Duke student, you need to be conscious of this and show respect for the people who have lived their entire lives in Durham and will be there after you spend your 4 years and move on.
3.) The problem here was not the dancers, but the prosecutor. The dancer was taken to the hospital, it was obvious that "something" occurred to her recently - either at the party or before/after the party - and she was put into a corner to explain what happened and then the DA ran with the story and it got out of control. Nifong needed to win an election, and he was given a situation that would allow to get the black vote in Durham. I think his intention was investigate, take it to a grand jury, get elected then quietly drop the case after the election. But it became a media firestorm and a national story instead of a local one, and he couldn't control it.
I'm glad the charges were dropped and it should have happened long ago. I hope Nifong is prosecuted and, at the very least, disbarred. He is the adult in the situation who took advantage of his position of authority. Both the 3 students and the dancer are the victims.