That was added to the Pledge in the 50s. Not everyone says the line, and a court of appeals even found it unconstitutional (the Supreme Court overturned the ruling due to plaintiffs standing, and did not rule on Constitutionality). http://www.religioustolerance.org/nat_pled1.htm
Is it really an arbitrary difference, though? You can't separate the Confederate Battle Flag from its history. There's nothing arbitrary about pointing out the various facets of that history that make it inappropriate to fly over government buildings/on statehouse grounds.
I don't think the three entities listed as "Good" are "good." Nor do I think Israel is "bad." In all four cases the reality is so much more complicated than simple adjectives. For instance, internationally Israel is not always rated very highly in freedom of the press. The Press Freedom Index has it at 96th in the world. For reference, the US is 46th, Russia is 148, and many of the small European countries make up the top 5. Freedom House gave Israel it's lowest possible "Free" rating, but still marked it as Free, though it has been marked as "Partially Free" a couple times in recent memory. There's been all sorts of censorship crises there, esp. relating to the military. It is, however, the best rating in the ME. But it is undeniably the only "western democracy" in the region. We could discuss the rising power of a non-secular faction there, if we wanted, but meh.
imo, there's a difference between the flag of the current, sitting government flying over buildings, and the flag of a rebel country - that in addition to that has all sorts of meaning to a lot of people regarding hate and the like - that was defeated in a war flying over a government building. I don't think you can directly compare the two.
Prestige, promises of wealth, a united europe, easier tourism spending, etc. But the currency is inflexible which makes it doubly hard to deal with recessions. The more I think about it the more I think it would probably be a good idea for Greece to get out of the Eurozone amicably for now, but I may be wrong.