My buddy's thoughts on Phillip Henry Mann's acquittal got me started... :-)
First, I don't agree that the story begs the question: should a criminal have a reasonable expectation of privacy? If the police have reasonable grounds for suspecting that someone's a criminal, then they can take that person downtown for questioning. So, yes, if they have reasonable grounds for suspecting someone's trafficking drugs, by all means, stop the guy and bring him downtown for questioning. The key point in this story is that after the initial pat down and questioning (which I completely agree with; I don't want to see a cop wounded or killed by some scared kid any more than the next guy), they got the guy to empty his pockets because they were curious about the soft object they'd felt (as I read it). If they were surprised by what it was (i.e., they didn't suspect they'd find it when they approached the individual), and they'd convinced themselves that they weren't in any danger prior to asking to see the contents of the pocket, then there's no reasonable grounds for the search.
See, as with any aspect of the law, you've gotta go out to the boundary cases... Those improbable, and often really scary, situations. In this case, yeah, you know, I'm not saying it'd be the end of democracy as we know it if this guy lost his weed, paid a fine, etc. But what about the 911: The Road to Tyranny footage of the woman being pulled over and eventually charged with obstruction of justice? For those who haven't seen that excellent documentary, think of ticket quotas or cop surliness taken to an unreasonable extreme. Legislation is our only protection against these, thankfully rare, sorts of abuse.
Now, on racial profiling, I'll just tackle a few of its many facets. First and foremost, one should always be mindful of the biases and mind-sets of the people involved; the concept of racial profiling should never be separated from the people involved in the real-world situation, because their biases will have a huge impact on how the concept is applied. For example, if it's obviously a crutch propping up sloppy work, then we, as a society, have a problem.
But, for the sake of argument, let's say that, from a counterterrorism standpoint, some degree of racial profiling makes sense strategically (as in your example of al-Qaida). That is, it makes sense to look for people of a specific ethnicity in the search for the rest of that particular terrorist group. Now, how that appropriateness is applied tactically, in certain American and Canadian cities, for example, is another kettle of fish entirely. We must compare them very carefully (as I mentioned), keeping in mind the freedoms that we enjoy and the concept of being innocent until proven guilty in a court of law.
It's scary stuff, man. If you're on the right side of the law today, then, yeah, sure, pull over, let them search your car, your home, your pockets; you've got nothin' to hide. But, s**t, look out if you happen to be on the wrong side of things tomorrow.