Separation of Church and State: Where do we draw the line?

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My father and I were in a heated discussion today: where do we draw the line on the separation of church in state? Kids are no longer aloud to have prayer time or say the pledge of allegiance in school. A monument to the Ten Commandments was banned from a state office. Nativity scenes can't be displayed in government buildings. I myself am a confirmed Catholic. But I am also an American. We do not have an official religion, so to support one or even suggest one would be wrong of us. We were based on the freedom of religious persecution. I am not saying that displaying our beliefs is any form of religious persecution, but not allowing these displays in government offices and buildings is not either. If we would like to display our faith, if a government employee would like to display their faith, they should feel free in any place save for a governement building. Personal opinion, and opinions are like... well, you know. What do you think?