The spirit of your post I do understand. Just to be a Catholic nerd, talisman refers to an object imbued with magical powers. The rosary is not magical—it is a prayer guide. And as others have said, the rosary should NEVER be worn as jewelry—it cheapens the sacred tradition. So I guess I would side with the principal maybe for a different reason. If the offender is Catholic, a talk with clergy would be a good thing.
1) From the article it is impossible to know the religiously beliefs of the youth.
2) A religiously neutral education is impossible and not matter what the government does it will not be religiously neutral in content or consequences either for the youth or the other kids in the school.
3) The only solution that is compatible with the First Amendment and freedom of conscience, not only for the youth but the other students as well, is to work toward complete privatization of all education.
4) This kid is likely a snot! If he had been in a private school from the beginning both he and his parents would likely have had the benefit of feeling the full force of the law of natural consequences, and today, he might not be a brat.
Where in the Constitution does it say you have the free exercise of religion but only have government workers talk to the clergy?
Any government worker powerful enough to uphold your religious beliefs is also powerful enough to trash them. This is true whether it is a school or any other institution ( private or government).
OK...So let's look at the First Amendment problems with this case that are irresolvable. The school must make a binary decision to either allow the rosary around the neck or forbid it. Both allowing and disallowing is impossible. So....
1) The school disallows the rosary around the neck:
The youth ( and indirectly his family) are denied free expression of their syncretic Catholic belief.
**ALL** the students are taught that some religions are more favored than others. Atheistic humanist secularism has the government imprimatur and is the religion taught in all government schools, and that **certainly** is an establishment of religion problem ( establishment of atheism)!
There is a freedom to assembly problem as well because the youth with the rosary is **forced** to assemble with students and government workers with whom he and his family disagree on religious matters.
2) The government allows the rosary around the neck:
This is both an establishment of religion and free assembly problem. **All** of the students are forced to assemble with this youth are subjected to direct and indirect exposure to this youth's syncretic Catholic belief systems. ( Something that even truly Catholic parents might find objectionable.)
There is only **one** possible solution that is compatible with the First Amendment and freedom of conscience: Begin the process of privatizing all education in the nation.
This is the sentence. To support the government school principal for any reason is to support government school spiritual tyranny.