Does it establish a state church, or prohibit the exercise of religion? It, rather, proscribes some minor hoops a non-for-profit corporation has to jump through for a tax exemption.
If you wanted to set up the First Church of Steve, Reformed, you could, and the State's police powers couldn't say boo! about it. But, church or no, you still would have to meet the State's police requirements, such as zoning or building code. For an added benefit - the right not to pay taxes, and the right to have your donors deduct their donations from their taxes - there's some minor hoops they ask. Don't like the requirements, don't take Caesar's money. But if you do that, you owe taxes.
Its a fair system.
Just arguing constitutional understandings here, Jude, so I'm giving my reading of what it says. Specifically, the FREE exercise clause says "Congress...no law...denying the FREE exercise thereof."
One cannot take someone's money and say that that organization is unaffected in it's overall freedom. Therefore, to threaten their money is to deny FREE exercise.
No law = no law.