Have you heard the latest? There is a bill (S.1877) floating around which will allow members of the Armed Forced and vaterans out of uniform to render the military salute during hoisting, lowering, or passing of flag.
Check out The Library of COngress for more details...http://thomas.loc.gov/cgi-bin/query/z?c110:S.1877:
Personally, I think this should have always been the case, but at least it is being worked on to be corrected. Given the current climate, I am hopeful that it will be passed.
The current status: Latest Major Action: 8/10/2007: Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution, Civil Rights, and Civil Liberties.