"He may or may not have been sincere about toleration. Partly because of his personality, and partly because of the twists and turns of his policy, he lost within three years whatever trust his subjects had in him. They didn't even believe it when his son was born, preferring to believe the most absurd rumours about a suppositious child.
It wasn't a good time to pursue a policy of toleration anyway, especially one that seemed to favour catholics. The thousands of huguenot refugees who arrived from France after Louis XIV's Revocation of the Edict of Nantes in 1685, making it seem all too likely that James had a return to Rome in mind.
It would have been a difficult trick to pull off, and it would have been wonderful if it had succeeded, but noone really trusted James, so he was doomed to failure.
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IMO, he WAS sincere about religious tolerance, that was what essentially did him in, the bigotted establishment couldn't stand it and fed the fires of intolerance.
They were at James for years, this was a man who had over 60 (?) witnesses to the birth of his son, yet STILL couldn't "prove" his son was indeed his.
The depths some of his supporters, his friends, even his children sank to was truly pathetic, IMO.
One has to really respect a man who had some principles and was willing to make a stand for them.
Check this out if you wish:
http://www.news.harvard.edu/gazette/20