You are right, Palemoon... Mr. Newdow, by his actions, has basically shown that he's a hypocrit. Since he doesn't believe in a particular deity, he's now attempting to force his own will on everyone else when he could have simply reserved his own rights with his child's rights and have been done with it (presumeably just by making an official request of the school district).

Furthermore, interpreting words literally, well... I think you said it better than I - the words therein the pledge are directed at a spirit of a nation, not completely literal (at least that's my belief).