Is "Hein" a blow to Church-State separation?

1.
The facts are in this morning's Supreme Court Hein v. Freedom From Religion Foundation ruling. It is a decision denying taxpayers the ability to challenge the constitutionality of the President's use of federal funds to aid religion, when those funds are not designated by Congress for that purpose.
In the case, The Freedom from Religion Foundation (FFR) filed the lawsuit over the use of government funds to promote Faith-Based and Community Initiatives. The US Court of Appeals for the Seventh Circuit ruled that taxpayers have standing to challenge a program created by a Presidential executive order, alleged to promote religion, and which is financed by a congressional appropriation. The Supreme Court reversed this decision in a 5-4 ruling saying that "Those expenditures resulted from executive discretion, not congressional action. We have never found taxpayer standing under such circumstances." Justice Samuel Alito wrote the majority opinion.
2.
Church-State cases deserve and get the outmost attention of the organized Jewish community. By and large, it responded in unison to the new ruling: Bad, worrisome, disappointing (not surprised though, many figured in advance this was coming).
The American Jewish Committee responded by saying that "Today's Supreme Court decision undermines the Constitution's protection of religious liberty". Mark Pelavin, Associate Director of the Religious Action Center of Reform Judaism, responded in a similar fashion, stating that "the controlling opinion essentially negates the relationship between tax money and freedom of conscience, so long as we maintain the charade that Executive spending has no effect on citizens' rights."
3.
"The Court", states the Anti Defamation League "largely ignored the fact that no congressional legislation has authorized the President's faith-based initiative. It cannot be that the many billions of dollars that have been made available to faith-based institutions under the President's program are immune from challenge by taxpayers".
The real fear among liberals ahead of this decision was that the court will use it as to overturn the Flast v. Cohen, a decision which secured the right of taxpayer standing. "In order to prove a "requisite personal stake" in such cases", explains OYEZ the decision, "taxpayers had to 1) establish a logical link between their status as taxpayers and the type of legislative enactment attacked, and 2) show the challenged enactment exceeded specific constitutional limitations imposed upon the exercise of Congressional taxing and spending power". All spins aside, today's ruling fell short of such overturning, as Palevin notes: "it could have been worse. The Court did not explicitly overturn the 40 year old precedent (Flast v. Cohen, 1968), which allows tax payers to challenge government spending under the Establishment Clause of the First Amendment, despite the fact that two Justices (Scalia and Thomas) would have done so."
4.
"When it comes to the incendiary political issues that end up in the Supreme Court, what matters is not the quality of the arguments but the identity of the justices. Presidents pick justices to extend their legacies; by this standard, Bush chose wisely", wrote Jeffrey Toobin in the New Yorker today. In the same fashion one can argue that it is not the quality of the argument but rather the outcome that matters, and the outcome today was not in favor of those opposing the faith-based Presidential initiatives. On the other hand, looking at the content of this decision one has to wonder: is this really about Church-State separation? The justices don't seem to think it is: they only argue over the more technical question of whether the taxpayer can challenge an executive budgetary decision.
5.
So here's the dilemma: If one ignores the decision, it is as if one doesn't care. Crying wolf is the right choice for those anticipating more battles over faith-based initiatives.
On the other hand: the court's decision manifests a practical victory to the faith-based initiatives, but not necessarily a constitutional one. In that sense, crying wolf is giving them a victory they didn?t have.