The flag isn't what is racist, the context around it is. I could hang a confederate flag over my house if I wanted, and that doesn't make me a racist, or unpatriotic. Just like exposing children to images of confederate flags without telling them what it is won't silently turn them into little negro-hunting racists.
On the topic of Apple censoring it, they have the right to censor whatever the hell they want from their products. They don't want apps with confederate flags waving around in their App Store, good for them, to be honest that sounds incredibly logical to me.
When it comes down to it though, how much does anyone here actually care? Do you frequently look for American Civil War apps in the App Store? When I think about it, I don't give a damn if Apple doesn't like the Confederate Flag, it is completely irrelevant to me, and I would assume the same goes for most people; good example of people looking to get offended by something.