If not, how in the name of Dobbs was this case not laughed out of court?

It appears that the banner was off school grounds, but facing the school. That the slogan could be construed as advocating drug use to students, contravening state law and school ordinance, was enough to hold against Frederick in the lower court.

(Which is not to say I agree at all with the lower court, Lou. I'm sympathetic with with Chief Justice Roberts' somewhat sarcastic summary of the issue at hand:

You think the law was so clearly established when this happened that the principal, that the instant that the banner was unfurled, snowballs are flying around, the torch is coming, should have said oh, I remember under Tinker I can only take the sign down if it's disruptive. But then under Frazier I can do something if it interferes with the basic mission, and under Kuhlmeier I've got this other thing. So she should have known at that point that she could not take the banner down, and it was so clear that she should have to pay out of her own pocket because of it?...And so it should be perfectly clear to her exactly what she could and couldn't do.

But that said, Morse should still have had enough practical expertise to distinguish between a low-grade prank and a serious disruption. That she didn't or, given the mtutal history between her and Frederick, couldn't, may very well cost her.)

...the principal should be spanked with a copy of the constitution.

Agreed, but you just know that would get Starr all hot and bothered, and delay us never having to hear that fucker's name again.

I'm not quite sure if I understand the school (morse's) position on this case -- any speech that goes against what the school defines as its mission is subject to censorship?

I think I understand it perfectly. She is an idiot and has little to no basic understanding of 1st amendment rights.

Regardless of where that speech occurs?  I'm a bit disappointed that this got all the way to the supreme court -- I would think that the rights recognized in the first amendment had a bit more respect in lower courts.

This is completely ridiculous and I agree that I am surprised that it got all the way to The Supremes instead of being solved in a lower court. However, maybe this is a good thing because instead of ending up as a little known case awarding a trivial sum of money to the student and his family it will instead set a nationwide precedent, hopefully discouraging school administrators from starting these evil shenanigans in the future.

What next -- subpoenas to discovery the anonymity of students advocating pro-drug messages online?

I wouldn't doubt it. Especially since some schools (even some universities, IIRC for underage alcohol violations) have taken it upon themselves to start "googling" their students or checking their MySpace, etc accounts and punishing them for "dress code violations," "giving out too much personal information," or "conduct unbecoming to the school."

Technically, the question SCOTUS is addressing is whether Frederick has been harmed sufficiently as to allow him a suit to collect damages from Morse, the school district, and possibly the city. They aren't so much questioning if Morse overstepped her authority, but rather by how much and how egregiously.

The courts all the way down have voted for Fredricks in this case.  The Supreme Court is the first time that Morse has gotten a sympathetic hearing.  

Thalia