Using that logic, one could argue that the Cinco De Mayo party was a politically-motivated attempt to intimidate non-Mexicans.
No you couldn't. I've never seen a Cinco De Mayo celebration that was in any way exclusive of non-Mexicans - and doubly so in a white-majority school district.
Do you think the school kids in Morgan Hill regularly have Cinco De Mayo parties at their school?
I expect so, yes. Such is commonplace in schools in the southwest. Typically Saint Patrick's Day, Oktoberfest, Chinese New Year and often certain Jewish holidays are also celebrated as opportunities to share and celebrate the contributions of various immigrant groups to American culture.
One group of students was allowed to have a special day to celebrate the nation with which they apparently identify,
No. Cinco De Mayo is not a celebration of identification with Mexican nationality. It's an American holiday. It is not widely celebrated in Mexico. The purpose of the holiday is to celebrate Mexican American heritage and contributions to American culture. To the extent that it has anything to do with national solidarity (which is to say, not much), it's about solidarity between the United States and Mexico in resisting European colonialism.
If the school was having some big event for Saint Patrick's Day, I'd have no problem with students who weren't of Irish descent wearing something that acknowledges their ethnic background.
Wearing an American flag does not aknowledge these kids ethnic backgrounds. For that, they'd presumably need Irish and/or German and/or English and/or whatever flags. If they'd done that here, well, I doubt anyone would have objected.
Which has nothing to do with the students involved in the incident.
It has everything to do with them: that's the community that's raising them, and those are the values they are going to such lengths to express publicly.