Hate crime laws in many states work the way you describe. If I'm not mistaken, however, and I'm no lawyer, Michigan's hate crime law (the existing one and the proposed expanded one) is a bit different. Rather than being purely a sentencing enhancement, it allows prosecutors to actually lay an additional charge. In practice, a hate crime charge would never be brought on its own, because conduct that met the elements of the statute would meet the elements of other criminal code statutes – like assault, uttering a terroristic threat, etc.

It's my understanding that in practice the existing ethnic intimidation law has nearly always been used to add a charge, rather than on its own.

The thing about free speech is that intent is an element in many crimes. So, it's not as if laws based on what people think are so radical. They exist, and people generally think they're OK.

Hate crime laws take things a step further, though, in that the motivation behind the intent becomes an element of the crime. (This is not entirely unique, but it's unusual.)

For some people, that's a step too far. It used to be for me, though I've changed my mind for several different reasons.