How so, is the Flag Code punitive? Are not the 1st Amendment rights extended to those that serve? If the Flag Code was so stringent explain why many, including myself at one time, wore the flag on the shoulder of my flight-suit? If you can't wear it you can't wear it, right?
http://www.usflag.org/uscode36.html
This code is the guide for all handling and display of the Stars and Stripes. It does not impose penalties for misuse of the United States Flag. That is left to the states and to the federal government for the District of Columbia. Each state has its own flag law.
Criminal penalties for certain acts of desecration to the flag were contained in Title 18 of the United States Code prior to 1989. The Supreme Court decision in Texas v. Johnson; June 21, 1989, held the statute unconstitutional. This statute was amended when the Flag Protection Act of 1989 (Oct. 28, 1989) imposed a fine and/or up to I year in prison for knowingly mutilating, defacing, physically defiling, maintaining on the floor or trampling upon any flag of the United States. The Flag Protection Act of 1989 was struck down by the Supreme Court decision, United States vs. Eichman, decided on June 11, 1990.
While the Code empowers the President of the United States to alter, modify, repeal or prescribe additional rules regarding the Flag, no federal agency has the authority to issue 'official' rulings legally binding on civilians or civilian groups. Consequently, different interpretations of various provisions of the Code may continue to be made. The Flag Code may be fairly tested: 'No disrespect should be shown to the Flag of the United States of America.' Therefore, actions not specifically included in the Code may be deemed acceptable as long as proper respect is shown.
(j) No part of the flag should ever be used as a costume or athletic uniform. However, a flag patch may be affixed to the uniform of military personnel, firemen, policemen, and members of patriotic organizations. The flag represents a living country and is itself considered a living thing. Therefore, the lapel flag pin being a replica, should be worn on the left lapel near the heart.
I think the first part of the reply should cover your question on the punitive aspect of the Flag Code?
Second part is in regards to the patches on uniforms.
As far as 1A rights for people in the service, we who had to follow the UCMJ knew that we had to abide by a different set of rules than civilians.