Update Jan 29th: The teachers at the school today talked to the children about flag etiquette and the meaning of the flag and why the pledge is made. The lights were left on in the room, so the flag could be clearly seen and the children were told that they should face towards and look at the flag. The parent spoke to the Principal and the child's teacher. The Principal said they would not show the image of the president at the same time as the pledge tomorrow. The Principal apologized for causing offense. The parent and Principal and teacher left on good terms.
Anyone can make a mistake - the measure of a person is what they do next. The Principal and the teachers did well - this is a good thing.
Note: the blogosphere is now saying this is a hoax because the school has not been named or the school district has not confimed it. Instead of seeing this as a situation that was amicably resolved, it is seen as an attack on Obama, which it never was, and an attack on the flag, which it never was. It is not a hoax.