What I have heard that there are two concerns. One is that the Germans have a sort of collective guilt for what he did during the second world war (including the holocaust) and the other one is that he is also revered by the neo-nazis. Germany is one place where you can get prosecuted for carrying any sort of Nazi symbol (I know of a report which said an Indian women got into trouble for carrying Swastika like Hindu religious emblem in her locket). So any impersonation of Hitler is generally avoided.
When Madam Tussauds announced that they will be including Hitler's wax figure in their new branch in Berlin it created much debate. According to Der Spiegel:
Michael Braun, of the center-right Christian Democratic Union (CDU) told the Thursday edition of the Berlin daily Der Tagesspiegel it was "distasteful beyond comparison." Green politician Alice Ströver called the Hitler wax figure "tasteless, disgusting and in bad style."And the inevitable had to happen:
On Saturday morning, just seconds after the new branch of Madame Tussauds wax museum opened its doors for the first time, a visitor brushed aside two security guards, jumped over the desk at which Hitler was sitting, and tore the Führer's head off.That explains a lot about the public sentiments.
The man, a 41-year-old from the Kreuzberg neighborhood of Berlin, was just the second visitor to enter the museum. "Never again war!" the man yelled as he attacked the wax figure.