Well, i'm not saying martial law should be imposed or anything. Sure, they chose, but we can pass moral judgement on their choice. 

Also, regarding the history of the confederacy itself, we can pass judgement about it's purpose because that was a conflict about slavery. It doesn't compare 1:1 to the American Revolution, which is difficult to frame in it's own right but can probably be simplified as "We didn't need British rule and it was in the way of things we wanted to do". The Confederacy is a whole other box of worms.

In the nineteenth century, in the United States, the entire political system became divided over slavery. It's an aspect of our culture at that time that gets into everything, really, and so it is difficult to avoid. You can imagine the economy of antebellum America to be split in two, with the north evolving into a modern industrial economy based on wage labor and the south retaining a slave based rural society with a class system almost comparable to feudalism. For the north, the south was stunted, and with the western world abandoning slavery, the South felt... cornered I suppose. 

They retained their system through retaining a certain amount of political power. The government worked out a deal where there would always be an equal number of free states and slave states. This was important to my state (Missouri), as we didn't enter the union for several years because they had to find a free state to accompany us in. It also played a part in what we took from Mexico and what we didn't (there were those after the Mexican American war who wanted to annex all of Mexico, but racism and fear of breaking the slave state/free state divide made that idea unpopular).

The initial fix was to keep the divide along a specific geographical line. When, in the 1850's, the state of Kansas was allowed to chose how it would enter the union rather than forced to follow this geographical rule, they chose to be a Free State and people from my state responded by more or less invading. That was how contentious this was.

So when the Republican party was formed as an abolitionist party, and when Abraham Lincoln ran under the promise that no new slave states would enter the union, that was what caused the rebellion. Cultural differences might have lubricated it, but the cause was a fear that slave owning states would become a political minority. It's not like Scotland, who were playing the game of thrones just the same as England. And it wasn't like the American Revolution, where British rule was becoming a detriment to our economy and our ability to manage our own relations with our neighbors. The American Civil War was about the slavery question.

About the flag, I personally don't have any problem with it. My dad is a redneck who used to hang out with bikers, I grew up in rural Missouri seeing it all the time, and I get how some people legitimately see it as a symbol of southern pride. I don't think we should ever go the direction of Germany and full out ban these sorts of symbols because of their sordid history. I do think, however, that people should at least accept that the confederate flag makes some people uncomfortable, and that their reasons are completely legitimate too. It is also a symbol of white power, regardless if most people who use it agree. And because it is a symbol of white power, I think that it is in bad taste for it to fly over any state capitals.