No, just because we don't like it doesn't mean we make it illegal. We just make it social unacceptable.Some use it for hatred, some just for Southern Pride.
Pride in what?
Slavery
Treason
Reconstruction atrocities and lynchings
Jim Crow
Segregation
Do Germans use the Nazi flag for German pride?
In the modern day, it's just a symbol for being proud of living in the South. The South (now, in modern times) actually is persecuted for being "backward" and being "redneckish" - it's just a representation for being proud to live here in spite of the current intolerance toward many Southerners with more old fashioned and traditional ways. Not those things you listed people don't think about that when they purchase a Rebel Flag.
I think it used to a symbol of pride for living in the south, lifestyle, cooking, various culture and traditions - however in recent years the real direct historical associations of the flag with so many atrocities and negative aspects of southern history has led many southerners to move on and find a new way to be proud and celebrate the American South. But some remain stubborn.
As the South becomes more diverse and enlightened about their own history and where many traditions and sayings actually come from (their dialect is a product of black slave children playing with the children of their white masters) the South must put the Confederate flag in proper historical perspective and stop stubbornly clinging to the notion of harmless "southern pride".
There is really nothing directly associated with that flag, historically speaking, that one should be proud of. Things such as cooking and any non-slave economic or industrial advances would only use the southern flag in the loosest of associations--perhaps to attract the more backwards thinking crowd.
... then we're left with the issue of the right to display it ...