Now that this forum does seem to have become another Dalai Lama fan site, we need to redress the balance the other way, to support Dorje Shugden practitioners and our Gelugpa lineage, by giving some of the background to the ban. The argument above does not work because the Dalai Lama is not spreading Je Tsongkhapa's tradition, he is a staunch advocate of Rime, practicing all four traditions of Buddhism.
First period of exile
The Dalai Lama seeks to strengthen his rule over all Tibetans in exile. To obtain this, he tries to mix the teachings and practices of the four main lineages of Tibetan Buddhism (in a system called Ri-me, literally "non-lineage"). The Dalai Lama has two, sometimes contradictory, functions. On the one hand, he is a spiritual leader for many; on the other hand, he is the political head of state for Tibet.
Prior to the Chinese invasion, the different schools of Tibetan Buddhism where able to co-exist separately from one another, and mutual respect and tolerance existed between them. However, after the Chinese expelled the Tibetans it created a dilemma for the Dalai Lama. In order to advance the Tibetan cause against the Chinese, the Dalai Lama felt that the Tibetan community would need to be united. The Dalai Lama reasoned (we would say incorrectly) that the way to unite all the Tibetan people together would be to spiritually unite the four schools of Tibetan Buddhism together.
Thus, the Dalai Lama himself became a practitioner of all four schools, and became a staunch advocate of the Ri-me (non-lineage) movement. He then tried to unite all Tibetans into this new presentation and form of Tibetan Buddhism. Some practitioners, most notably the Dalai Lama's own spiritual guide Trijang Rinpoche, were of the view that the spiritual cause of centuries old lineage was more important than the political cause of Tibet, and so as a result, they did not go along with the Dalai Lama's new set of teachings. The common denominator of many of those who did not go along with the Dalai Lama's new way of practicing was that they were Dorje Shugden practitioners.
This presented a unique challenge to the Dalai Lama's efforts, because in effect his 'own tradition' wasn't in agreement with what he was doing, and so that presented a serious question on the legitimacy of his actions. Thus, the spiritual non-compliance with the Dalai Lama's wishes became perceived by him as a political challenge to his authority. It is for this reason that he came to view Dorje Shugden practitioners as a threat to the unity of Tibet - they would not recognize his spiritual authority to override centuries of lineage for the sake of political expediency. He is doing this in order to be not only the political leader but also the sole religious authority over all Tibetans - which he had never been before.
One can say that he wants this absolute authority for good reasons, namely to strengthen his hand in his negotiations with the Chinese. Dorje Shugden practitioners would argue that an even greater Tibetan unity can be established by pursuing the 'Unity in Diversity' that the Dalai Lama so eloquently defends in large stadiums in the West. If the Dalai Lama actually practiced what he preaches, he would have no difficulty getting all Tibetans (and indeed the whole world) behind him.
Mid-seventies
The Dalai Lama chooses to prevail over the Gelugpa Lamas by destroying the reputation of Dorje Shugden, the special Dharma Protector of their lineage. He tries without much success to discourage the practice of Dorje Shugden among the Gelugpa elders and monks.
Since the Dalai Lama considers himself to be intricately linked with the cause of Tibet, anything that is a threat to the cause of Tibet is by extension a threat to his life - thus he claims Dorje Shugden practitioners are a threat to his life. As politicians sometimes do, he then created a pretext for what was in fact a political move to marginalize any opposition to his consolidation of all power (political and spiritual) under his leadership. His pretext was that Dorje Shugden was an evil spirit. Therefore, those who relied upon him are not Buddhists.
If they are not Buddhists, then they can no longer represent a challenge to his authority. Because in Tibet religion and politics are one, to disagree with the political dictates of the Dalai Lama is tantamount to disagreeing with the Dharma (the teachings of Buddha), which nobody can do, and so therefore there is no scope for dissent. This is the core political reason behind all of the Dalai Lama's actions. It is important to keep this in mind when interpreting his statements. When this political calculation is clear, then the real purpose behind the present campaign against Dorje Shugden practitioners can be seen for what it really is.
Eighties
The Dalai Lama becomes famous in Western countries. He talks about compassion and non-violence. The world perceives him as the Pope of Buddhism. He starts the campaign FREE TIBET and becomes the champion of Tibetan independence.
Overlapping the FREE TIBET campaign he maintains talks with China, and in 1988 for the first time he tells the Chinese that Tibet does not need to be independent, that autonomy should be enough. This is not consulted with Tibetans nor publicized among them. (Whether it is the right policy for Tibet or not does not matter here so much as the unilateral decision-making and, later, the resulting scape-goating of Dorje Shugden practitioners for obstacles to Tibetan independence.)
1989 -The Dalai Lama is awarded the Nobel Peace Prize. Tibetans' hopes for independence grow exponentially.
Mid-nineties
The seeds of an opposition against the Dalai Lama's choice of autonomy against independence had been sterilized by his renewed popularity due to the Nobel award.
When hopes for Tibet vanish with the passing years, the opposition to autonomy takes shape. In 1995 the Dalai Lama's brother starts his Independence Walks and co-founds the Tibet Independence Movement, in open defiance to the Dalai Lama's decision about autonomy.
The Dalai Lama needs to distract Tibetans, very emotional about their Motherland, from his unilateral decision to abandon independence.
March 1996 His government proclaims a BAN on the worshipping of Dorje Shugden. This old domestic matter with the Gelugpa Lamas is brought to the general Tibetan community more than 20 years later.
Ordinary Tibetans are made to believe by the Dalai Lama's words that Dorje Shugden harms the cause of Tibet and the health of the Dalai Lama - both anathema to them. Having found a scapegoat for Tibet's plight they forget about independence or autonomy and start actively to implement the ban through segregation and persecution of Dorje Shugden practitioners, including physical violence.
2008: Year of the Olympic Games in China
The Dalai Lama chooses a special date - February 2008, barely one month before the Tibetan riots - to implement the final blow against the practice of Dorje Shugden and its practitioners, first in the great monasteries, later in the whole of the Tibetan community. All Tibetans have to take an oath that they are not worshipping Dorje Shugden and that they are not having any religious or social contact whatsoever with practitioners. The taking of the oath is exported abroad.
While a letter campaign to defend the practitioners from segregation was taking shape, the March 2008 riots in Tibet make any complaint against the Dalai Lama sound ridiculous, offensive or playing into China's hands.
After the riots the Dalai Lama proclaims several times that Tibet needs only autonomy, not independence, from China. He does not fear opposition to this fait acompli.
The Tibetans no longer react to the loss of their country's hope for independence because they are busy implementing the segregation of the Dorje Shugden practitioners. Practitioners are treated as pariahs.
All those in favor of a Free Tibet know that the 2008 Olympics represent the best chance the Dalai Lama has for pressing the Tibetan cause while the world's attention is fixed on their plight. What better time for the Dalai Lama to complete his campaign against Dorje Shugden practitioners than now, under the cover of the Olympics, when noone would dare speak against the Dalai Lama for fear of undermining him, and thus weakening his hand in his negotiations with the Chinese? In general, there is little to no room for dissent within the Tibetan community, but how much more so now during the period of the Olympics?
In short, in the name of Tibetan unity (and his absolute political and spiritual power), the Dalai Lama is seeking to gather all Tibetan Buddhists into his Ri-me movement, thereby eroding and ultimately eliminating the distinct identities of the different schools of Tibetan Buddhism. Dorje Shugden practitioners have no problem with Tibetan unity, but they do not believe it can (or should) be attained by sacrificing the centuries-old traditions of Tibetan Buddhism, in their case the Gelugpa school, as distinct entities.
Journalists so far have not become aware of what is taking place within the Tibetan community while the rest of the world is focused on the negotiations of the Dalai Lama with the Chinese during the Olympics. However, despite severe social, economic and political consequences, a few brave individuals are speaking up and calling the world's attention to what is going on. They are not doing so to undermine the Dalai Lama at this critical time, rather they believe a Free Tibet is not enough, it has to be a Tibet that is free - free for all to practice according to their faith.
The Dalai Lama smiles and talks of religious tolerance on the world stage.