I think that the crazy stuff, like apple banning civil war games or people talking about demolishing sites related to confederate history, is embarrassing and asinine. Those moves should definitely be mocked loudly by everybody involved. Wal-Mart and the like banning the flag seems like an awkward attempt at advertising (if you are so concerned about human rights, look to your employees or to the sweatshop workers who make your goods). 

But when we are talking about the flag itself, we should acknowledge that, no matter what the flag symbolizes for others, it has taken on complicated connotations. The KKK took it as they symbol, that can't be ignored, and it has been used by racist groups long enough to have earned that connotation. I understand that it is a strangely divided symbol, and that for some people it is a sign of rebellion or southern pride, but if you are going to use it you have to accept that it is going to be looked at differently by different people.

I think that southern state governments flying confederate symbols is generally inappropriate (its celebrating the time they caused hundreds of thousands to die because a few wealthy people wanted to run an economy based on slave labor.), but if people can feel comfortable using the stars and bars or the bonnie blue in place of the battle-flag, that would be a reasonable compromise. To fly a contentious flag and tell people that your interpretation is the only correct interpretation? That's poor behavior from a state government.