Lip reading is very real. Clearly you haven’t been around a deaf people or you would know. But she defiantly said the word ‘flag’ and her facial expression and eye roll shows that it wasn’t something positive.
I agree that lip reading is used to some extent. But on those occasions, there is context. I don’t necessarily buy that we know the context Michelle was speaking under, which could dramatically alter our interpretation of the event. Also, as to emphasizing how much interpretation is going on, I don’t get the impression she was being negative in her comment. I get a feeling that she is being awe struck.
Another poster noted that it was just disrespectful for her to say anything at that moment. I think yes, if you are well groomed statesman or states-lady (whatever :)), you probably would keep your mouth shut since you are visible, and your actions could bear interpretation, but I have not gotten the impression from M.O. that she is any way groomed to be a states-lady.