Richard Esenberg, Tom Kamenick and Clyde Taylor at the Wisconsin Institute for Law & Liberty have just filed a lawsuit challenging the policy; you can read the Complaint, which lays out the facts and some of the Institute’s legal arguments.
The ban on “offensive” speech is clearly unconstitutionally vague and likely viewpoint-based; and, even setting that aside, the rule limiting leafletting to a narrow zone would be unconstitutional even if it were content-neutral. A university does have power to limit speech that is loud enough to cause a disruption, or to limit large demonstrations that can block pedestrian traffic; that is particularly so within university buildings. But the policy here is much broader than that.