Tyler Green's been doing a whole series on the flag in contemporary art (start here). From an art law perspective, the key cases are Texas v. Johnson, 491 U.S. 197 (1989), and United States v. Eichman, 496 U.S. 310 (1990), which established that flag-burning is constitutionally protected speech. In his Law, Pragmatism, and Democracy, Judge Posner adds the following:
"Some of the Justices dissented on the ground, which failed to persuade most students of constitutional law (myself included) that the flag is a unique national symbol, which the government should be empowered to protect from being desecrated. To a pragmatist the dissenters' argument is stronger today in the wake of the September 11, 2001 terrorist attacks .... This is not because burning the flag is likely to increase the terrorist threat; not at all. The issue is offensiveness, not danger. But offensiveness is, as I have said, a common basis for permitted restrictions of freedom of speech .... Yet if Congress again passed a law against flag-burning, I think the Supreme Court would again strike it down. Not out of devotion to stare decisis ... but simply to demonstrate that the Court doesn't buckle under pressure. If this conjecture is right, it suggests an essential arbitrariness to law that formalists should find intensely disquieting and that supports the pragmatist's belief that logic is indeed not the life of the law. Much of the law seems to depend on accidents of timing .... If the first flag-burning case had not come to the Court until the autumn of 2001, there might today be no constitutional right to burn the flag."