Greetings!
This is one of those legal cases that highlights the sometimes disparity between what is legal and what is practical or even ethical/moral.
JAVA: the problem for the employer was that the requested conduct was 1) not intrinsic to the nature of the business nor a necessary job function (this is different then say an Amish girl wanting to work at Hooters or a JW wanting to be a policeman) and 2) evidently there was no prior history during the employment where the employee had been asked to do the offending task which is a factor.
What is probably troubling to many people is how minimal the offensive task SEEMS to the average reasonable person. I mean putting out some poinsettas which took 10 seconds! But legally, speaking it doesn't matter how small the thing may seem. Some may see that standing and saluting the flag or saying the pledge of allegiance is a minor thing, doesn't involve much; but some including JWS (and atheists) may find it objectionable and a violation of their concience.
What is outrageous to the average reasonable person, including me, is that it is a fundamental principle of law that the "compensation" should equal the "injury". thus in this case the JW should have won, received a legal declaration in his favour and maybe if it was required under Canadian law to give a monetary award been awarded $1 as nominal damages. (No punitive damages should have been awarded)
there is a happy medium and reasonable grounds in situations such as these and it is up to the judges and juries to inject a little common sense into the legal system that works most of the time.
You do however, raise a very good issue. There are certain things that certain Employers would be shocked to learn, such as that patient/client confidentially might be compromised by a JW with access to such information. (Example, JW employee in medical lab notices that an STD test is positive (including after retesting) and recognizes the patient's id to be a single JW active in her congregation. She feels it is her higher duty to (secretly) inform the Elders contrary to explicit employer and state/federal laws that require patient confidentiality.) these issues are much more important than the one presented in this thread.
This thread deals with labour and civil rights law that is applicable to everyone. In that case the decision is a good one as it protects the rights of all.
-Eduardo
PS: to Simon, your assertion that you should get $30K from (the WTS?) for their not "allowing you to put up Christmas decorations" is cute but off-base here. This is a situation dealing with an employer-employee relationship and applicable civil rights laws. Totally different from a person's willing membership in a voluntary organization where the "Rules" and requirements for recognized membership are not only explicitly spelled out, intrinsic to membership but probably made aware to you before you joined.