As much as Apple's decision is highly contestable, I don't know if it is worth trying to make a PR coup by implicitly backing a racist flag. I know I personally wouldn't want to be remembered as being that guy. Anyway, well done Valve, I guess, stick it it to big bad Apple.
Edit: to illustrate my point a bit more I think there is a difference between simply proposing a game with historical flags in your store, which I think should always be allowed, and putting a controversial subject in front of your store for PR purpose. For me it's like saying: see, see in our store we have games with controvertial flags - come buy our games. I'm not confortable with that. Maybe I'm wrong though.
Edit: to illustrate my point a bit more I think there is a difference between simply proposing a game with historical flags in your store, which I think should always be allowed, and putting a controversial subject in front of your store for PR purpose. For me it's like saying: see, see in our store we have games with controvertial flags - come buy our games. I'm not confortable with that. Maybe I'm wrong though.