that is the point. if the SCOTUS strikes this down, then its also illegal for a school to have students portray Mary and Joseph, or Moses.
now that said - we all know the problem here - the schools are dominated by the left, and as such will screen out judeo-christian topics, but actively advance islamic ones. But I don't know what the court can really do about that - either this type of representation violates the separation of church and state, or it doesn't (as ruled). They can't render a decision that says it only violates separation if its about Islam.
And conversely, they can't rule that educational topics can not be banned just because they touch upon religious themes if that religion happens to Islam. IOW, this has nothing to do with an establishment of religion, and separation issues don't even arise.
I know what they can do; pretend that the case before them concerned students who were forced to learn Catholic Church prayers in traditional Latin form; they'd have shot it down like clay pigeon. THE SCOTUS seats a bench full of one-dimensional bone heads, including the two middle-of-the-road moderates that Bush put there.