Rules regarding US Flag

After our wonderful discussion on American Flag as a design for quilt or clothing items, I decided to research on the rules and regulations for the proper use of the American Flag. Based on the information I found in several places ( which they all matched), I like to invite everyone to check out this article posted by Cornel University Law School:  http://www.law.cornell.edu/uscode/text/4/8 
We had an awesome discussion on how parents feel about their kids wrapped in American Flag blanket or wearing a T-shirt with the American Flag as the pattern to show how patriotic one really is. But the main answer is that by law no one should do so. It stated: “The flag should never be used as wearing apparel, bedding, or drapery.” So my first question is: Why is it OK to sell and wear such design if it is not legal to do so at the first place? The other interesting point in the article is the burning part. In my understanding from the class discussion, the burning of the flag is OK but the article said: “The flag, when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way, preferably by burning.” This to me is different than burning of the flag is simply OK.