(Rant)
I'm originally from Mississippi, and have lived in the South all my life. The Dixie banner we're talking about is the Confederate battle flag, or Rebel Flag. It means different things to different people. I have a cousin to whom it means a rich tradition of Southern heritage and the steadfast bravery of men fighting for what they think was right. I have a coworker to whom it signifies the military arm of a splinter state which wanted to institutionalize his forebears' social status as chattel.
Regardless of what you mean when you fly that flag, as a symbol it's been taken on by white supremacists and neo-nazis all over the country. Even if, like my cousin, it means heritage to you, the symbology has been poisoned. The key point to me, though, is that I can think of no other nation so dedicated to freedom of speech that it permits the open presentation and honor of a flag from a failed rebellion. While I'm Southern, I'm American and I don't think the Confederate flags have any place except in history books. The rebellion failed. If you want to show you're a rebel, get your nose pierced or dye your eyebrows or something.
I'd also take issue with the dismissive comments on Southern tactics and military cunning. The whole Civil War affair started for many reasons, not the least among them being the rising economic influence of the Southern states on the national scene. The South, though, was agricultural, with a pitiful manufacturing capacity, a minimal transportation network, and little in the way of logistical capacity to support a standing army. On top of this was the Union's naval efforts to blockade the South starting in 1861. Lee managed to hold out until 1865, and the South only really fell after the Union took up a scorched-earth approach and started putting the few urban centers of the South to the torch.
Lee was the worst possible thing that could have happened to the South in the Civil War. Without him, it would have probably been over by 1863 at latest, and the South would not have had to suffer through the Reconstruction so terribly. Not that there's much room to complain; we're just lucky that the Reconstruction didn't foment enough additional resentment and spark a followup (since we've spoken of Germany, arguably the Nazis would not have been able to seize power in Germany if it weren't for the desperate condition Germany was in after the Treaty of Versailles basically gutted the country's economy).
But to the main point -- I consider myself Southern very deeply. And as a Southerner, if there's one thing I find it impossible not to love, it's a lost cause. But for all of that, toting around a battle flag from a rebellion that was put down over 100 years ago is just ridiculous. It's like some Italian ranting that "Spartacus gon' rise again!" Besides, regardless of heritage, any government that promotes racial slavery isn't one to get nostalgic over.
(end rant)