To set a few facts straight:
99% of the people who fought for the south in the civil war never owned a slave nor did they fight for slavery. They fought because a foreign army invaded their home states. States were much more important than the "nation" back then, in fact, most people didn't consider themselves "American" in our modern sense of the word - they were Virginians or New Yorkers or <insert state here>. "America" didn't really become "The United States of" until after the Civil War. If a foreign power decided to invade your area today you might defend it as well. Even if you lose the subsequent war your future ancestors may still be proud of your actions.
The Civil War was fought over money. Just like most politics in modern life it all comes down to the almighty dollar. The Federal government was doing things that made the north wealthy and the south less-so and yes, that included slavery, but the real issue was money. The Southern states decided that if the US Gov was doing things that harmed them they should seceed. The states had voluntarily joined the union, ergo they should be allowed to voluntarily leave the union. If I sign up for a gym membership today I shouldn't be held to it for life if the gym does things I don't like. Maybe I'll get a Bowflex in my house instead.
Just because a very small percentage of people use a Confederate battle flag as a symbol of racism does not make all southerners racist, not does it make anyone who is proud of the actions of their southern ancestors to be racists or bad people.
News flash: there are and were racists in the north as well. Where did the Underground Railroad mostly stop? Canada. Why? Because excaped slaves often had such a bad time of things once in the northern states it was safer to go to Canada.
When Lincoln passed the Emmancipation Proclimation (a useless document at the time, by the way) there were riots in the north and near mutinies in the northern armies by those who wanted nothing to do with a war about or for slavery.
There is racism everywhere. Racist whites, racist blacks, racist Asians, etc. To think otherwise is pure ignorance and to focus so intently on just white southerners is no better than the racism itself.
It is possible to be both proud of one's southern heritage and the action of one's Confederate ancestors and not be racist.
And one reason so many still keep the South "alive" today is that many of the same issues still exist politically - is the Federal government too powerful, infringing upon our rights, doing things they shouldn't be doing? I think many today, regardless of political party, would say yes. Just as the Tea Party invokes the spirit of the American Revolution there are others who look to Southern secession as the same spirit (indeed it was considered by many to be the Second American Revolution, not a Civil War, at the time).