No compromise on separation of church and state
This link from my most recent link round-up illustrates why we can't just let such cases slide. It concerns the case in Oklahoma City where state legislators, flagrantly defying the First Amendment, voted in 2009 to allow a Ten Commandments monument to be placed on the grounds of the state capitol. A Satanist group has now applied to place a tasteful and educational monument of its own (illustrated above) on the site as well, arguing that a privilege extended to one religion must be extended to others as well. The legislature has stopped any further religious installations on public property pending the outcome of an ACLU lawsuit against the original Ten Commandments monument, but if the ACLU loses, they'll need to decide what to do about this.
It's in the reader comments to the article that the real issue surfaces, specifically in this comment by "Professor1982":
@tsduy - Um not all "religions" are legitimate. If you or anyone chooses to argue they are, that means there are countless events that makes the Federal Govt guilty of violating the 1st Amendment such as the ATF/FBI raid on the Branch Davidians in Waco TX. Just because someone wants to worship a head of lettuce, that doesn't mean they practice a religion.
And there you have it. There are legitimate religions and illegitimate ones, and the government can give official recognition to the former without needing to do so for the latter.
Other commenters pounced on Professor1982 and rejected this distinction on obvious grounds, but the fact is, it can't be avoided, once we back off from the strict First Amendment position of zero church-state entanglement. Because groups claiming to be religious will demand the same recognition legislators have given to the religion they favor, and every such claim will have to be accepted or rejected. In other words, we'd be getting government into the business of deciding what is and is not a legitimate religion.
Now, pretty much everyone would agree that, say, Christianity is a religion and the theory of gravity is not, but the grey area is vast. What about Satanism, or Devil-worship (they aren't the same)? What about Mormonism, started by an obvious con man but now sincerely believed by millions? What about Scientology? What about small cults centered around a single charismatic figure, as the Branch Davidians were? (Christianity and Islam started off that way, according to their own scriptures.) What about modern religions which claim to be revivals of ancient ones, such as Wicca? What about Santeria, Voodoo, even astrology, if someone decides to declare that a religion in hopes of getting official recognition? What about that person who decides to worship a head of lettuce? How are the councilors of that town in Mississippi going to decide among these? There are people in this country who, out of sheer ignorance, can't imagine anything other than Christianity as a "religion". There are extreme fundamentalists who consider the Catholic Church to be Satanic.
(Professor1982's reference to the Waco raid is, of course, a red herring. Religious entities, even those of unquestioned legitimacy, are not allowed to break civil laws that apply to everybody.)
The problem could be solved by establishing an official religion and giving official sanction only to it, and of course that's the ultimate goal of the Republicans who keep trying to chip away at the First Amendment in Oklahoma and elsewhere. But this would never pass Constitutional muster, being the most clear-cut example of what the First Amendment was specifically written to prevent. If it somehow did, the United States as we've always known it would be over.
There's no way around it. If local governments are allowed to get away with seemingly minor and innocuous endorsements of religion, we can't avoid having those same governments decide which religions are "real" ones, entitled to such endorsements, and which are not. Once such decisions are made and legitimized, even for trivial cases like who gets to put a nativity display (or equivalent) on public property, they'll be cited as precedents in more serious cases. We can't let that happen.
On the matter of atheists supposedly being too aggressive and "giving atheism a bad name", I'll close with my favorite Pat Condell video, which addresses that issue so clearly and forcefully: