Ken MacIntyre, yes that’s one way that the term “conspiracy theory” is used; as a term of ridicule to evade discussion. But there’s another way too, and the first way couldn’t work effectively without it. This symbiotic relationship is what I’m trying to clarify.
Taking the example you cite, Finkelstein is right that the Holocaust is played upon to divert and vilify criticism of Israel. But such diversion and vilification is greatly strengthened by the genuine existence of Holocaust denial; indeed, it would look lame without it.
Holocaust denial is an example of conspiracy theory in my second sense above, in that it proposes that all the copious evidence for the Holocaust is merely fabrication by an immensely powerful conspiracy.