I grew up in the South, and I've lived here for over 30 years. Most people who fly The Confederate Flag know very well that it's at a minimum racially offensive, and most likely inflammatory. There are a handful of Bobby Bouchers that believe whatever drivel their parents, teachers, and older white people tell them about The Civil War and the "modern" meaning of The Confederate Flag, and the rest know know better, but use this as a smoke screen for their own racism.
I've yet to hear what other 'states' rights' The Confederacy was fighting over beyond slavery. There are plenty of historical records to support the notion that the southern states seceded over slavery, and none that I'm aware of that paint a different picture. The Jim Crow Era, and violence towards African Americans during the Civil Rights Era and today just go to show that while The South lost the war, they maintained their intent.
I do see some change for the positive. Fewer and fewer of the people I grew up with are sticking with the older thoughts on racism and the display of The Confederate Flag, but there are still plenty of other people that are still ignorant, willingly so or otherwise.