I think who displays the flag makes all the difference. At my school (in California), there are a group of 'Valley Boys'. These guys are your typical, live out in the middle of no where, hunt anything with a pulse, can't spell their own name kind of hicks (maybe I exaggerated a little). Anyways, these guys are born and raised in California, and they are fortunate enough to go to a good public school.
Well, they also happen to be extremely racist, mainly because of where they group up. At our small school of about 800 kids, we have I think 3 African American kids (one of which was recently expelled for bringing a loaded gun to school). They have very little exposure to African Americans, and the little exposure that they do tends to be negative just because of the area (our school, maybe one security camera, a school in the next district which is about 90% African American has about 50 cameras, all over the school).
Now, you can easily see how this is a prime breeding ground for stereotype-drivenl racism. Anyways, getting back to my original point, these 'Valley Boys' drive their pickup trucks to school, with Confederate flag stickers and such. Now, in the given situation, given that these kids have never been to the south, and are rather racist, anyone care to take a guess why they would display the Confederate flag?