The children's parents, hearing the children complain about their gay teacher (mistakenly thinking they are complaining about his homosexuality, rather than his sexually explicit acts in class), feel they are intolerant and send them to the Museum of Tolerance, where all sorts of gags occur, such as the children going on a ride through the "Tunnel of Prejudice", where speakers project all sorts of racial slur words at them and waxworks of minorities in stereotypical poses (the group gets a shock when a stereotypical sleeping Mexican waxwork turns out not to be a waxwork, but a real Mexican man). The tour guide lectures the children about how Cartman being fat (unwittingly giving them new ideas for insulting names to call him in the process) is his own life choice, before a smoker is spotted outside the museum and the tour guide and the parents lay into him in the same way they attempted to teach the children not to do with minorities.
Mr. Garrison notes that there have been no complaints about his behaviour to the school, so he steps up his campaign to get fired for being gay by performing gerbilling on Mr. Slave. As a result, the children refuse to attend class with him, so their parents send them, at Mr. Mackey's suggestion, to an Auschwitz-like (with the camp leader speaking in a faux-German accent and being referred to as "mein Führer") "Tolerance Camp" which uses arts and crafts, strict tactics, and painful labor to teach children tolerance. Parker and Stone may have put the Tolerance Camp scene in to show the contradiction involved in being intolerant of other people's refusal to accept homosexuality, e.g. the line spoken by the camp's "Führer", "Here, intolerance vill not be tolerated!"
Back at school, Mr. Garrison is set to receive the "Courageous Teacher Award" for overcoming adversity. Frustrated that he has not been fired, he redoubles his efforts and, on the advice of Mr. Slave, he plans to make a show of his ceremony to show the parents his behaviour, theorizing that the parents will be shocked and call for his sacking themselves if they see his behaviour. Meanwhile, Lemmiwinks traverses the regions of Mr. Slave's digestive system, receiving advice from three animal spirits who have been killed while trying to escape (a Frog King, a Sparrow Prince and the Catata Fish respectively).
At the awards ceremony, Mr. Garrison appears with his lover in an extremely stereotypical and flamboyant gay manner. Although Mr. Slave's prediction is correct and the parents are indeed shocked by the behavior, they cannot bring themselves to criticize it, as they are in the Museum of Tolerance and fear being branded "intolerant" and when people continue to call Garrison and Slave "courageous" for his actions he finally breaks down and screams at them, telling them that tolerance of something one hates is different from acceptance of it as good (with Mr. Slave agreeing, saying, "yeah, Jesus Christ!"). He goes on to say that tolerating his homosexuality should not mean that he can do things that are obviously inappropriate in front of his students. He begs to be fired so he can collect on a discrimination lawsuit. Principal Victoria says she has a better idea. The parents apologize to their now-malnourished and emaciated kids, who have been released from Tolerance Camp, and despite the children's attempts to inform their parents of Garrison's behavior throughout the episode, the parents tell them that they should have told them about Mr. Garrison's behavior, and about how much they "suffered" when their children were in the camp.
Principal Victoria concludes that Mr. Garrison and Mr. Slave are "obviously intolerant of their own behavior", and says she is sending them to the tolerance camp so they will accept themselves. Mr. Slave thinks of the horrible torture as "kind of fun". He suddenly coughs up Lemmiwinks, who has freed the spirits of other animals who got killed inside Mr. Slave's body. They appear to Lemmiwinks, and crown him the Gerbil King. Lemmiwinks exits the scene with the Ballad of Lemmiwinks playing over the credits.