Dedication to God, love of family and Country

This article tells a story that is sad. Seems a young eagle scout (age 17) wanted to honor his grandfather with a flag flown over the capital. So he filled out the necessary paperwork, paid the necessary fees and included a personal dedication that said it was for "his dedication to God, love of family and County." [sic]

But the official rules prevent religious expressions, so the word "God" was removed.

I thought the first amendment said that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof..." Wasn't this eagle scout exercising his freedom of religion? Isn't Congress (who set up these rules) prohibiting him from that exercise?

(Note: Some headlines and radio reports said that Nancy Pelosi defended this policy. I couldn't find any facts to back that up. If you find any comments by Pelosi pro/con please let me know)