Well, according to my recollection, flags can be flown at night if they're illuminated, and in foul weather if they're weather-resistant. I agree on the tattered ("unfit for service") flags being flown, though.
A flag which is unfit for service is supposed to be disposed of in a proper manner. I keep a tiny flag stuck in the woodwork down by the mailboxes, and after about a year, when they start fading, I retire them and every couple of years I take my collection of retired flags down to the VFW post for proper disposal. (Contributions are accepted.)
According to some Congressional action (memory fades), the flag is defined by law (not by a mere Congressional Resolution) as a living person, and entitled to all the courtesies due a citizen. (Like military officers are by definition, "gentlemen.")
I used to work down by the main post office in Denver and twice I noticed that on Pearl Harbor Day, the flag was not set at half-mast. I was going to write to that local postmaster about it, but a little research showed that he had a Japanese name, so I figured the hell with it and only mentioned it to one of the counter folks there next time I was in the facility.
The next year, the flag was properly displayed, so apparently the word got up to him. But I take no credit; there were probably other red-blooded flag-waving redneck gun-totin' right-winger old farts who complained as well.
Terry, 230RN
ETA: Flag Disposal Project... I didn't know the BSA did this as well:
http://www.youtube.com/watch?v=fizgNjc8s6Y