I have to say that I hope the OP doesn't take this too personally. Obviously it seems disrespectful to him, but I have to defend my age group and those younger than me (I'm 28) by saying that I really don't think we've ever been taught to honor the flag that way? I actually had to Google "flag etiquette" because I hadn't heard that you were supposed to put your hand on your heart when a flag was lowered. My husband is in the military and I know that during "Colors" if you're on base, you're supposed to remove your hat and stand still, but I thought that was just a military thing. I didn't realize there was national flag etiquette (other than not letting it touch the ground, I did know that one).
In other words, with the exception of the teenager that was mentioned openly mocking the salute, I wouldn't judge those in the area too harshly. I'd venture to guess most just don't know what you're supposed to do during a flag retreat.