Not long ago, there was this story, in the same area of CA (I think). There are flag-related ethnic tensions there to a greater extent than elsewhere.
FoxNews.com - California Students Sent Home for Wearing U.S. Flags on Cinco de Mayo
That said, I think these school administrators took a lazy, easy way out after hearing a complaint about the bicycle flag. Easier on them to tell one kid to take off the flag then to sit down with groups of kids and do the work of teaching them about the First Amendment and a fellow classmate's symbolic gesture on Veteran's Day. Teachable moment, which they completely missed. I don't think anyone should lose their jobs over this one thing, but if they were already on a slope due to general incompetence, this would provide the push.