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'In a vacuum, this case is unfair to a prospective french citizen...'
I'd go as far as to say that, irrespective of a sociocultural vaccuum, the State--and the polity it represents--have every right to be as stringent with prospective citizens as it deems necessary. The French attitude in this respect acknowledges a desire to preserve a 'French' civic culture: one in which the population knows its rights--and duties--and who can exercise them accordingly. That attitude, I think, is rather admirable enough, and perhaps goes a long way in explaining the large proportion of the eligible population who regularly vote. (85% during the presidential election last year, compared to 61.3% in the UK parliamentary elections in 2005 and 60.7% in the US during the presidential elections in 2004, the latter of which was a 36-year high.)
Let's also not forget that France's general mistrust of radical religious belief--implicit in its constitutionally strict separation of church and state, i.e. Laïcité--was established in reaction to Christianity. But in a country that has faced a sustained terrorist threat from fundamentalist followers of Islam for many years prior to 11 September 2001, with the added caveat of a large (minority) Muslim population, the application of laïcité has become more controversial.
Let's also not forget that the woman in question began wearing the niqab upon emmigrating to France. The niqab is an alienating garb to one's peers. The decision to wear such vestiment exclusively upon moving to France, whilst pretending to be 'integrated' into wider society, is reason enough to arouse suspicion.