Do you do this on the highway as well? A few times, I have seen cars come to a complete stop or slow down to under 30mph to avoid passing a funeral procession on the highway in the NC city where we work. I thought this was extremely dangerous when everyone else is driving 75+mph and may not have noticed the processional.
I think some of it is cultural and some of it is misunderstanding of what the actual law says. One of those things where someone tells you "it's illegal to ___" and you believe them and pass that information on to others. My husband has had this conversation a few times with coworkers who are adamant about it being illegal under any circumstances to pass a funeral procession. So if they are driving on the highway they will slow down to a crawl, let the processional go by, and then ride in the passing lane at a slow speed next to the last car so that they (and no one else behind them) will pass the procession.
I looked up what I could find for NC:
(g) The operator of a vehicle proceeding in the opposite direction as a funeral procession may yield to the funeral procession. If the operator chooses to yield to the procession, the operator must do so by reducing speed, or by stopping completely off the roadway when meeting the procession or while the procession passes, so that operators of other vehicles proceeding in the opposite direction of the procession can continue to travel without leaving their lane of traffic.
(h) The operator of a vehicle proceeding in the same direction as a funeral procession shall not pass or attempt to pass the funeral procession, except that the operator of such a vehicle may pass a funeral procession when the highway has been marked for two or more lanes of moving traffic in the same direction of the funeral procession.
Basically, if you want to stop (oncoming), you have to get all the way off the road so that others can safely drive around you. And the "no passing rule" does not apply when you're on a highway-- you should just move over to the left lane and continue driving.