The inside-the-law approach that works to some limited extent is public community rejection. Things like large groups showing up and standing with their back to the Nazis.
The method that has historically stopped Nazis like this involves getting some level of police cooperation and beating them up
I agree with you; if I started going out to pro-Nazi marches and started killing a few of them out openly in the street, it would create martyrs and bolster their support and make them more resolute to continue their shitty movement, and in fact empower more morons to join them.