The Supreme Court is always twisting itself over Church and State. While it seems pretty clear (At least to this Constitutional scholar) that the US government just should not be in the religion business, all these little exceptions have to be carved out: for "In God We Trust" money, for "God save this honorable court" and so on. The constitution really won't stand for a government endorsement of religion, but religion is very popular in this county, so we get SCOTUS rulings like this:
A sharply divided Supreme Court on Monday upheld the constitutionality of displaying the Ten Commandments on government land, but drew the line on displays inside courthouses, saying they violated the doctrine of separation of church and state.
Sending dual signals in ruling on this issue for the first time in a quarter-century, the high court said that displays of the Ten Commandments -- like in their own courtroom frieze -- are not inherently unconstitutional. But each exhibit demands scrutiny to determine whether it goes too far in amounting to a governmental promotion of religion, the court said in a case involving Kentucky courthouse exhibits.
So in a courthouse is a no-no, but near the statehouse is o.k? Frankly, at this point I don't think anybody has any idea what the criteria is for religious display on government property, not even the court.
Slate has a good discussion going on SCOTUS. Always read what Dahlia Lithwick has to way about this stuff.