Editor’s note: the HaAretz article mentioned below says the woman in question lived in Machane Israel, not Mahane Yehuda. We are currently inquiring from HaAretz if they indeed meant Machane Israel. Machane Israel is not even remotely a Haredi neighborhood. It contains two non-orthodox yeshivas: Hebrew Union College (Progressive/Reform) and the Conservative Yeshiva and two large centers housing visiting groups for the Progressive and Masorti movements. It also contains the YMCA (Young Men’s Christian Association), four hotels and one under development catering to business travellers and mainstream tourists. Women regularly walk through the area in pants and many HUC students rent apartments in the area.
Note posted on apartment door asking a religious (Masorti) woman to leave because she isn't modest according to the Torah.
According to a report in HaAretz, Masorti (Conservative) Jewish woman living near Mahane Yehuda, the main stall based shopping market in Jerusalem, was sent a threatening letter last week demanding she leave the neighborhood. The letter was signed “The Modesty Police” It complained that she had transgressed the Torah’s rules of modesty.
The woman says she moved into the neighborhood because she needed a place to stay after she returned from America. She did not know that the neighborhood was predominantly Haredi. She also says that she gets along well with her neighbors, and was not aware of problems. She says she wears pants but does not wear short ones.
Police have said they will step up surveillance in the area, but the woman is still afraid. A friend of hers who ignored the warning had her apartment burned down.
The area around Mahane Yehuda is culturally diverse and includes haredim, hippies, and middle class professionals attracted to an area with a lot of character and ripe for renovation projects. There are many different styles of Jewish religious life, both Sephardi and Ashkenazi, progressive and traditional.
Haredim in the area have been trying to extend their control over the area. For several years the Kolben Dance Troupe had covered their rehearsal room with shades because of Haredi complaints about the women dancers. The Dance Troupe is on a main road leading out of the main Jerusalem commercial area and is in no way Haredi. It is part of a complex that includes a public library and one of Jerusalem’s major performing arts venues. However, there is a residential cluster of Haredim one to two blocks away off of the main road.
Haredim have also complained about entertainment in the Mahane Yehuda shuk. The city government has been hosting street festivals in the area for the last few years. Haredim dislike that women are included in the performances, seeing it as a violation of their understanding of Jewish modesty. They have threatened to set up their own strictly gender seggregated shuk.
Most Jews, including religious Jews, do not consider the Haredi understanding of gender segregation to be required by the Torah, nor even later Jewish law nor identity.
Hat tip: Failed Messiah
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Jacob's Bones 
What the exact religious/observance composition of the Old City and New City should be is an interesting question. Jerusalem with all it’s different groups and visitors really is one of the most cosmopolitan and diverse of all urban centres in the World. It is also very beautiful BTW. The prophecies state that over time more and more people will turn to the good and the one G-d and thus the petty delineations between the sects will break down. A perfect homogeneous community of people who all dress and act the same would be boring, yet a city split up into different enclaves of souls who don’t talk or interact with other would also be a problem. It’s all about balance. Perhaps Maimonides “Golden Mean” principle should adorn the city planner’s office in one of those “Enthusiasm etc” motivational posters so common to various workplaces in the west.
Prayers for the Holy City.