I disagree. He stole the national ensign of an allied power, at the height of their national clebration of freedom - and now feels guilty enough to return it. Not much honor in that. His service to the U.S. is a different matter, and I thank him for that.
In my view, the honor comes in his decision to return it. Sometimes, being honorable includes righting a past wrong, no matter how long ago the past wrong was committed.