First, the Battle Flag of the Army of Virgina was not the flag of a country, but that of a military unit.
Except, once again it's not simply a military unit flag, but one which just happens to contain the flag of the Confederacy. So you've got to ask yourself, how many Civil War flags fly over modern capitals in the south from any OTHER unit commands? If the answer is none, then we're left with the same question. Is it really about historic pride, or about trying to intimidate and suppress blacks throughout the south?
Having lived here for most of my life, I can only concede it's the latter.
Second, some of the people flying the Confederate Flag as well as the Battle Flag are of Afro-American descent, they fly it because it relates to a part of their heritage.
If you live in the South, you either fly the Confederate flag (or at least don't make a deal about it) or you'll spend the rest of your life fighting with every white you encounter. It's not surprising many find it easier to conform to a racist society, what is, is how few of them there are!
It's also like Trump rallies (with many of the same people). If you only have a couple blacks supporting your cause, you highlight them every single chance you get (remember the quote about "my one black fan"?). Part of gaining acceptance among their childhood/professional peers is the recognition they're going to drag you image through the mud, meaning you'll be looked down on by most other blacks. It's a choice they choose. Rather than celebrating their heritage, they're surrendering it in hopes of getting along.
However, you've not addressed why it's OK to fly a flag more steeped in racism and genocide than another is. Either both are OK or neither is OK.
Sadly, it's a question of numbers. Over time, you learn to pick your battles. You can hardly win all the time, or even very often, but you don't pick a fight with hundreds of millions of committed foes. Instead, you choose the targets which you can change, who's support isn't solid. For ever rabid Southern rebel, there are dozens who shake their heads and hope they'll simply disappear.
There are very few who'll support giving America back to the Indians. However, people will support their trying to protect their lands.
It's about changing minds, getting them to recognize why others are offended by their actions. It's NEVER been about banning the flag! As far as I know, the ONLY flag that's ever been banned (for an extended period) is the Nazi flag in Germany (it's frequently flown in virtually every other country).
It's the same thing with the RedSkins. While a trademark is important, you've got to ask why it's so important they'd ignore a large percentage of their fans who find the symbol offensive. Surely they can find another symbol which would be more popular. Companies do it all the time to 'reinvent' their image.
But, now that I've vented about an issue everyone is sick and tired of hearing about, I'll shut up. After all, everyone has heard these same arguments ad-infinitum. If they haven't been won over yet, they're unlikely to anytime soon. Once again, it's about picking your battles. I won't win any converts here. Instead, we wait for my Southern companions to do something else incredibly stupid (they're dependable that way), and they'll expose the ugly underbelly of institutional racism. We only chip away at that racism. It's never gone away, and it's unlikely it ever will, but the more minds we can change (one at a time), hopefully the better off everyone will be.