I think she said “look at the way they fold that flag..”
the reason is that if you have ever been to a military funeral, the flag folding is carried out flawlessly with great detail in handling. The gentlemen who folded that flag did not do nearly as well as the military burial detail and that is what she was commenting about.
If you watch the video (I have watched it about 20 times) you will see that she only says 2 words before she says “they fold that flag.” She can’t say, “look at the way” because that is saying 4 words and it doesn’t even match her mouth movements.
As I said before, I think she is impressed—even though you seem to think it wasn’t a first-rate job. I don’t think she is going to say something negative when a million cameras are watching her every move. She knows how the game is played. And I sincerely believe that even Michelle Obama, despite her unpatriotic comment in the past, could really be impressed by something like this, especially on an emotional and moving day like 9-11.
Actually, I’ve changed my mind. I don’t think that she was impressed, but ticked off, regarding the flag-folding. I went back and looked at it, and boy, I was mildly shocked myself that these gentlemen did such a poor job, considering the importance of the occasion with lots of tv coverage and that many dignitaries were present. I think Mrs. Obama noticed the poor job, too and wasn’t shy about letting Barry know it. Even so, she should have kept it to herself-—I’m sure the flag-folders were doing their best and were sincere. Not an occasion to judge others, especially those that wear the uniform. And she knows that cameras are focused on her.