This case illustrates liberals' habit of standing the First Amendment on its head. The justification for banning the US flag teeshirts was safety. In other words, students wearing their country's flag might be attacked by the mexicans, who presumably were so inflamed by nationalistic passions they would be unable to behave like humans.
In effect the school rewarded the threat of violence and allowed it to be used to censor students who were doing nothing wrong. This is of course nothing new for liberals, but it is not the way the courts have typically interpreted the First amendment. They usually say something like popular speech does not require protection, but the authorities have an obligation to protect unpopular speech, not by censoring it but by acting against those who threaten violence.
One wonders why the school didn't just cancel the mexican holiday. It appears that was the real source of the tension. Of course, our schools are so tainted by multiculturalism that bending over backwards to show exaggerated respect for foreign holidays seems only natural to them.
This episode demonstrates once again how foolish our education leaders are. These are the same people who gave us "zero tolerance" policies that result in the suspension of young kids for pointing their fingers and saying bang or drawing a picture of a gun. They banned dodgeball but by golly, we will show some damn respect for mexican holidays or feel their wrath.