In the case of this guy in New York, the impersonation charge would only apply if he impersonated someone to secure a financial or material advantage that should only have been accorded to the person or type of person he was impersonating. Unless the airline in question had a specific -- and publicly documented -- policy of upgrading active-duty military personnel to first class, then the guy committed no crime. The fact that a well-meaning pilot, flight attendant or other airline representative offered to upgrade him to first class simply on the basis of his uniform doesn't make him a criminal.
It's important to remember that in cases like this, the prosecutor has to show that someone suffered harm or financial loss due to the alleged impersonation. Without such a legal standard in place, the police could legitimately walk through every shopping mall in American next December and arrest thousands of men for "impersonating" a guy named Santa Claus.
First, to wear an award, rank etc. and to hold one's self out as somebody who has earned that award or promotion is to (mis)represent the legitimate paper trail that would accompany that award or the holding of that rank. In other words, it's tantamount to falsifying government documents. There really is no difference between one sitting at home on their computer and generating a document indicating they've been awarded a DSC, and wearing the medal itself. As the courts came down, falsifying the medal order on paper is a crime, but wearing and verbally claiming to have won the award is not. It's like making it a crime to forge a certificate of title, but saying it's ok to simply drive off in the car.
My second caveat is that it's more akin to counterfeit than other forms of fraud. The mere existence of a fraudulent five dollar bill victimizes every person who legitimately holds a real five dollar bill by virtue of the fact that it lessens the value or 'prestige' of the five dollar bill. Similarly, the prestige of a Navy Cross, or a First Sergeant's rank insignia are lessened when you have 1 or 1,000 people out there running around claiming those honors when they're not rightfully entitled to them.
The only reason our currency has value is because our government says it does. Shooting down the SVA is essentially saying that the government has no right to place value (albeit other than a monetary one) on military awards, decorations, rank, etc. Keep in mind that our law already recognizes that there are things of value that can not be expressed in monetary terms.