Well... you're right, the distinction isn't useful for answering questions, but I think it's useful for expressing the question. Even if you say the government should be allowed to legislate "morality", it clearly shouldn't be allowed to legislate holiness, because, face it, for any one religion's holiness, there's almost certainly another that proclaims the same thing unholy.

Think of it this way: I'm saying is that you, as a libertarian, think a lot more is "legislating holiness" than I would. Taxation? That's legislating the holiness of an undefinable (Well, infinitely redefinable)"common good". So, we could debate where 'morality' ends and 'holiness' begins. But, if we used that structure, at least we'd know where we disagreed, and better understand why.