This link has a video with a student wearing a Confederate flag.
"They were using the 'F' slur and they were saying that if the gays get to wear the rainbow flag, then they should get to wear the Confederate flag, because it represents their heritage," one student said.
"It also has become something that symbolizes anti-gay at our school," said student Gaia Hendrix-Petry as she and other students walked in to district offices to get a meeting with the superintendent.
This article is a good summary and has links to the other articles.
The argument that this is a misuse of the Confederate flag is nonsense. The Sons of Confederate Veterans has made it clear that they see Confederate heritage as homophobia.