One the one hand we must call this organization holy, and on the other it shocks and scandalizes us to the extent that we wish to say, ‘We want no part with those people. It is impossible that these two aspects should go together! Men of God, who lead Christians, the children of the Church, to loss of the Faith? It does not make sense.’
Uhm, no, it absolutely does not make sense. So here we have +Fellay admitting that his own ecclesiology is nonsensical. We "must call this organization holy." In other words, we're forced to pay lip service to this mark of the Church even when the evidence directly contradicts it. So he renders this term "holy" absolutely meaningless. I mean, it says so right there in the Catechism that the Church is "holy" ... so we MUST say that, I guess, even if it's not actually true. Hey, +Fellay, how about putting your brain into gear? If this institution is not in fact holy, then the conclusion must be that it's not the Catholic Church. Instead, they call it holy when it is not, living in an absolute state of cognitive dissonance.
That's the best way to describe the R&R position ... one of complete cognitive dissonance. It's this cognitive dissonance which makes them bifurcate the Church into being two contradictory things at the same time.