I've been mulling over your thoughts about the selectivity of moral outrage, and I think you're mostly but not entirely right. Certainly the public, and even the chattering classes, is subject to the tyranny of the anecdote--in fact, sometimes anecdotes that aren't even true can be decisive in shaping public opinion. (Remember Ronald Reagan and his welfare queens driving Cadillacs?) It's also true that the TV pictures make a big difference: One reason why Bosnia and Kosovo register far more than Rwanda did is that it is so much easier to get news crews in and put the images up on the screen.
But it's also true that the anecdotes have power only if they play into some pre-existing disposition. I suspect that the Diallo case would not carry the resonance it does if lots of people weren't already feeling ready to condemn Giuliani's New York. The quality of life improvements are, as you say, very real; maybe the point is that precisely because people are no longer so afraid of crime, no longer feeling so menaced, they are ready to worry about justice and due process again. If the old line was that a conservative was a liberal who has been mugged, maybe the undeniable fact that lots fewer people are getting mugged is what makes it possible for liberal sentiments to make a modest comeback.
What I don't quite agree with, however, is the idea--which I think was implicit in your remarks--that students and so on are at the limits of their capacity for outrage, and therefore must choose a few easy targets. Surely the truth is that there is very little outrage out there--never in my life have I seen an America so content, so generally pleased with itself. (Dow 10,000!) And yet there is a downside to this fat-and-happiness: a sort of pervasive silliness of life, a lack of grand issues to give life meaning. Where are the causes that can make people, especially young people, feel that they are part of something larger than themselves?
I guess what I'm saying is that there are some resemblances between the environment today and America in the 1960s, say around the time of the Berkeley Free Speech Movement that started the whole thing. Now as then you have unprecedented affluence combined with a certain sense of spiritual and political hollowness, a feeling that there has to be something more to life, which creates fertile ground for "movements."
The big difference, of course, is that history has discredited so many ideals. Anarchy? Free love? Socialism? Revolution? Been there, done that, and seen the consequences. Maybe that's why there is almost a sense of relief that Giuliani has actually done something we can in good conscience be outraged about.