There are many shades of gray to these issues. Quoting Justice Black out of context is not dispositive, as he was a First Amendment absolutist whose views were never fully reflected in the Court's opinions. Clearly the quoted statement is not law, as the government does favor religion over nonreligion, for example in taxation, zoning and numerous other areas.
The initial problem is that I seriously doubt the Founders intended for the First Amendment to cover anything but traditional organized religion. Certainly their ancestors, who had come here in part for religious freedom, had no time for wicca, as they burned suspected witches at the stake.
Then there is the problem of when does nonbelief or belief in some alternative deity become protected religious activity. Is extreme environmentalism, which becomes a form of nature worship, protected religious activity? And if it is, why are the schools allowed to indoctrinate students into it but a kid is sent home if he has a Bible?
Personally, I think the courts should butt out of these issues unless a government body is using its governmental power to force people to join or practice a religion or preventing them from doing the same. The courts get into trouble when they start making these subtle value judgments as to whether a practice constitutes an impermissible favoring of one religi9n over another, or when they base decisions on whether or not nonbelievers' feelings are ruffled.