I'm sorry, but I am at a disadvantage- I have not read Joseph Story (something I will rectify). I have, however read extensively in the time frame involved, including works from many of our founders.
The main thrust of what would now be called "freedom of religion" was largely derived from a wholly Christian people hoping to allow for tolerance in the face of what they had personally experienced- Namely the English necessity by force of law that one must worship God as an Anglican, and the European convention that one must worship God as a Catholic.
It is quite clear that freedom of religion was to allow for Protestantism in it's many sects and forms and that the Creator mentioned in the DoI was in fact Jehovah. The foundational documents and letters expect the reader to be familiar with Christian thought and thereby imply the God of the Christians when God is mentioned.
At the time, each branch of Christianity was often defined as a separate strain- A religion in it's own right. It is my supposition that these various sects were what the government was to look upon in a secular way, that no specific "brand" could be endorsed.
That we were tolerant of other religions, or the lack thereof, was a distinction without a difference as long as everyone concerned accepted that in tenor and by it's framework this country was Christian by nature. It is when socialist forces demanded secularism that the troubles began.
It is that secularism that has begun the destruction of this country- Leading inexorably to relative morality, pluralism, and etcetera.
IOW, as I said before, it is absurd to believe that one can maintain a truly secular government as recent history attests. At best, one could hope for tolerance, with that tolerance being acceptable only if all adhere to the common ethical norm.
The argument is not calculated to render the secular state an impossibility, the secular state is an impossibility by it's nature without the establishment of some ethical sense acceptable to or enforced upon it's citizens.
Unfortunately, the moment an ethical sense is established, that philosophy is arguably and immediately a religion in it's own right, thus ending the supposed secularism.
Ergo, since the establishment clause clearly prevents the state from imposing a religion (or by extension, a philosophy), and since a secular state is impossible, one must suppose that the state's ethical sense must be derived from the status quo of that day- The more loosely defined Judeo-Christian ethic.
In regard to the rest of your statement, while I am all for as much power as possible being as close to the people as possible, it seems unwieldy for the federal government to enforce "freedom of religion" if the authority and regulation thereof is given to the state.
Since the right is given at a constitutional level, I would expect the authority thereof to reside at the federal level.
-Bruce
Properly applied, "secular" means "not overtly or explicitly religious". The argument that there can be no ethical sense without it seems to invariably come packaged with a theology that claims to be the sole true source of it.