A. This is a huge violation of church and state in my opinion. Public schools should not be holding services in any religious space. Period.
B. The kid is a moron. It's not about him being Muslim. Let's not get stupid with him.
To the best of my knowledge there is no legal tradition that prevents Muslims from entering house of worship of other faiths. There are reservations (and prohibitions) about joint worship, but not actually entering the space. The closest I've heard about this religious image issue is from an Orthodox Jewish friend of mine who would not set foot in a church because of the cross. Of course, as commentators on the SP thread note, where are the limits of this ban? What of museum pieces? Churches turned into museum, a la Hagia Sophia? Clearly the intent and use of such iconography must be taken into account.
I have delivered talks in churches, but would not enter one of those churches during my graduation with my master's in theology because it was a religious service. I have no problem with inter-faith worship, but I shouldn't be forced to worship, either in my own faith tradition, or any others. However, in that context, the cross was a powerful religious symbol that marginalized me and my faith. My decision was not based on a systematic legal ruling, but a personal decision made for my particular context. There was no reason to make a public issue it, other than to discuss it with administrators so they were aware.
I feel bad for the boy, but he can't make his Islam my Islam, and he shouldn't minimize our faith and personalize an issue that is bigger than him.