Due to freedom of speech, the flag absolutely should be allowed to be flown in private.
Is it a racist symbol? To some, to others political and to others just a shallow symbol of the south.
Symbols only mean what their bearer intend. If the KKK marches with a flag, it is probably racist in intent. I personally see it as a political symbol that stands for strong state gov'ts unified by a federal gov't, rather than a strong federal gov't imposing it's will every where.
Others see it as a sense of identity for their region with no deeper meaning behind it.
The swastika was origianally an indian symbol of peace. It is now widely recognized as a symbol of hate and oppression.
I can see banning it from gov't use as it is a symbol of another nation, but not personal.
Even if it is used as a symbol of hate at times, the freedom of speech is a freedom for all.