Excuse me, but I was born and raised in Birmingham, and other smaller Alabama towns, and I know very well what it means because I was very close to the guys that displayed that flag. If you don't want to be identified as a racist in the rural South, you stay away from that symbol.
You can talk all you want about heritage and whatever, but if you pointed that flag out to some of my old homies, the "N" word was not far behind.
I can't speak about small town Alabama but in big town Georgia the ONLY time I have heard that word in the last 30 years was from a guy I used to work for. He was from New York.
ROTFLOL!! and they call us who raise that banner "PREJUDICED"!