Does it just mean "crazy" in the sense in which Eliezer uses it?

Pretty much.

If I read "crazy" where you wrote "ridiculous", then your claim is that the first step towards a society in which crazy beliefs are acknowledged to be crazy is to heap scorn and contempt on them.

Well, not in all situations, and it doesn't necessarily have to be scorn and contempt, it could also be incredulity ("You believe WHAT?!"), for example. The point is to shock people out of their usual way of thinking, and that sometimes requires a bit of finesse. But a lot of the time scorn and contempt is necessary, yes.

But this is far from obvious. How do you make this argument without relying on the verbal similarity between the words "ridiculous" and "ridicule"?

The idea is that faith and self-deception are bad, while truth and rationality are good. So we reward good behavior and punish bad behavior.

How did the gay movement make so much progress in so little time? Was it by engaging in gentle, respectful debate with their opponents? Of course not. They just pointed out the obvious repeatedly: Those people are intolerant bigots. It was obvious, and yet somehow it hadn't really entered public consciousness, even among those who had the kind of morality that should have lead them to support gay rights. Now that it has, most of those whom we now call homophobes haven't suddenly become enlightened, but they've been forced to dilute their language if not their beliefs if they want to be part of the public sphere.

There's more than that to the gay movement's accomplishments, but heaping scorn and contempt on their opponents is definitely a big part of it. If it worked that movement, why not for this one?