Need More of a Plot Explanation

it's a long time since i have seen it the last time but i hope i'll help you a bit.
the blacksmith is hiding from nazis. i'm not sure about this but i think he helped the guerillas from where he comes from and had to flee. he let his wife and little child go some other place than he does to protect them.
that is what the fearfull villagers use to make him kill sekal. they blackmail, threaten him with telling the nazis what he did and where his wife is (they find that out someway, people gossip a lot in central european villages).
the religion plays a very important part in the movie - the blacksmith is protestant and the villagers are catholic. that's the reason why the kids make fun of him and bother him and why the villagers don't trust him.
the only tolerant one is the catholic priest. after the villagers tell him hew has two options - killing sekal or being incriminated to the nazis (which would probably lead to killing his wife as well) - he is so disgusted by their hypocrisy, materialism, lack of morals and fearfulness that he hangs the crucifix down from the wall, smahes it on the table and says: "you worship a piece of wood!" his religion is more about the living jesus, not a bigoted one. (i love that scene, there's a lot of catholic hypocrisy in my country).
that is why the vilagers let him die in hte end. they are afraid. afraid of the nazis who could be interested in the death of their protege and the vllagers could be harmed, they are afraid of blacksmith's revenge against them, they are afraid of HIM being a strong personality unlike them.
i do not remember the movie well so i can't tell you about the relation between the priest and blacksmith. i'm sorry you don't have subtitles to it, it's a great movieand the conversations are very truthful.

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