You know, I'm not sure I have any idea why you bring up law and freedom. Technically, laws restrict freedom. Saying without law, there is no freedom is like saying without light, you have no darkness.
Personally, I think people should be allowed to do whatever they want with the flag. I know it bothers people. The Confederate flag "bothers" people. The name "Redskins" bothers people. Even allowing a KKK parade in DC - "bothers" people. They feel it insults them. I equate them all the same, as basically people thinking they ought to enforce what does and doesn't offend them.
In other venues, this is called "politically correct".
I don't think freedom means being protected from being offended, but we are fast approaching a day when your average American won't tolerate it. They think laws are there to protect their little feelings. I don't. Laws like those have no business being made.
Excuse me, but I need to go dump some tea into the harbor....