As a militant homosexual and equally militant atheist, and as someone who has previously noted the irony of conservative appeals to judicial activism, I guess that I am supposed to favor the law school in this case. Nonetheless, I support the Christian group.
As long as the group is not demanding special privileges from government, as do some religious organizations that I could name, it has the right to freedom of association. A long string of court decisions holds that one should not have to surrender a fundamental Constitutional right to enjoy a public benefit -- decisions that I cited in a Michigan case to help gay activists.
If we want gay-straight alliances to enjoy freedom of association, we should be willing to honor the same freedom for others. Others' freedom is the price that we pay for our own.