As a Zen Buddhist, I'm not at all bothered by 'Merry Christmas'. In fact, I expect it from Christians as this is what the holiday means to them and it's an important holiday in their faith. However, it's positively bizarre to me that someone would suggest their Christian faith is diminished unless they always and knowingly wish 'Merry Christmas' to Jews, Muslims, atheists, and everyone/anyone that doesn't share their faith. As our country becomes more diverse, how does sometimes using a greeting that includes everyone (especially in classrooms, the workplace, or during a national address) diminish a faith that is allegedly about "peace on earth; good will towards man"? Do these militant Christians really expect non-Christians to go around wishing people 'Merry Christmas'? Flipping it around, why would they choose to be offended when they hear someone using an inclusive greeting? Isn't it a sign of someone being thoughtful or using common courtesy or...something like that?
Jim and I refer to our annual party as a Holiday Party. This is because neither of us are Christians. However, I sometimes call it a Christmas Party, and I'm happy if my Christian guests call it that too. Further, I often find myself saying 'Merry Christmas' to people (most often in response to the greeting), and it's never once crossed my mind that doing this was a betrayal of or in any way diminished my Zen Buddhist faith. As a result, I suppose I expect any reasonable Christian to be capable of using 'Happy Holidays' from time to time, if needed, without having a spiritual crisis about it.
I might be sympathetic towards the pro-'Merry Christmas' position if Jews, Muslims, Buddhists, Zen Buddhists (or whatever) were making a stink over well-meant greetings related to their religions. But they aren't. Christians seem to be the only religious group who feel the need to do this (and politicize it, I might add). I were Christian, I'd be much more concerned about what that says about my faith than in any perceived slight from kind-hearted well-wishers.