fleur - I have no doubt that anyone who actually knows what they're talking about (like you, who's familiar with Hetalia, or a historian who could no doubt point out several inaccuracies that make the medal an obvious fake) wouldn't be offended by virtue of thinking it was intended to glorify the Nazis.
But Average Joe on the street, or a news reporter, isn't going to know what they're talking about. They're going to see "someone dressed up as a Nazi with one of them there medals that looks Nazi and it's dated 1939" and think they've found the Nazi equivalent of Civil War re-enactors.
Again, I'm 99.5% sure no cosplayer would ever have the intent of glorifying the Nazis. That doesn't worry me at all. What worries me is that someone is going to eventually be mistaken as such, possibly even someone who innocently managed to get ahold of real Nazi paraphernalia and is proudly wearing it without knowing, and get themselves and/or the community some nasty publicity or worse.
Jacob - if the medal is actually from 1813, which is somewhat hard to believe given its condition, it's still not a WW1 medal. What it looks like to me is a somewhat inaccurate replica, but I'm hardly an expert historian. I just know that WW1 wasn't in 1939 or 1813.