The real intent of the first amendment was not to snub religion out of public life such as taking down the wreaths at city hall but was to protect church's from the government. The first clause basically says that congress shall pass no law respecting the establishment of... and the second part says that no law can be created that inhibits someone's religion.
I believe that the writers meant this to mean that government can't create a state church like the church of England because they knew that whenever the government got involved in anything it usually snuffed out its competitors. They feared that an official church of the state would destroy other people's churches and destroy the freedom for any individual to attend the church that they choose to along with it.
This protects individual's right to believe any religious beliefs that they want by preventing the state from creating an official church or inhibiting them from attending a church. This means that a small town full of Christians can have government funding for Christmas trees and a small town full of Muslims can fund <insert muslim ceremony here> without anyone else's right to believe or attend a different church being threatened simply because it separates church from state.
BTW, The expression's use of church does not refer to a person's religious beliefs associated with that church but the institution and organization itself. Its like saying separation of <the Vatican> from the state or separation of the Church of England from England. Its referring to the organization not the values associated with it.
You are almost completely right.. And it is very okay for religious beliefs to determine what laws are passed or not passed. I disagree with the underlined section.
The wall that separates the church from the state is a one way wall, like the way a two way mirror works. The state may not dictate to the people what religious beliefs should be followed, but the people, the citizens (who stand behind the mirror and speak through it, through face to face conversation, email, and other correspondence) may absolutely pronounce that proposed legislation goes firmly against/or for their beliefs and express their interest in it not being/ or being passed.
The problem comes when federal buildings want to put certain iconic religious symbolism up, in those federal areas. While I am okay with certain things being used for decoration, I am not okay with others. I do not want a cross being put anywhere. I do not like the ten commandments being displayed anywhere. A christmas tree is okay, because it is technically a mixture of a few different religions, and as such, is not a religious symbol, per se. A wreath is also not a religious symbol. I feel that putting a cross up somewhere, or keeping the ten commandments up, is much akin to putting a manger scene in the Supreme Court, or a statue that reveres the crucifixion of Jesus, even.
I am not anti-Christian, either. I am currently a Christian agnostic, and am thinking I might convert to being Jewish, but that is irrelevant here. I just think that there is a slippery slope when it comes to using actual icons of religions that may indicate that a specific religion is actually practiced within that federal building, or by the federal government as a whole.
If the whole nation, or even the majority, switched to Buddhism, then there would be a massive problem with having those ten commandments or the baby Jesus on tax-payer funded federal, state, or even local public property. Majority does NOT rule when it comes to separation of church and state. The separation should be in full, and the expression of faith should remain a one way avenue, and be only expressed by the people, not by the public servants of the people.
On a side note- I also think that it is retarded for anyone to put icons of Jesus or the cross anywhere, because, no matter how well intentioned it may be, it is idolatry, a sin in and of itself. =)