Zero-tolerance policies always seem to lead to zero-brain results, they are unfortunately the favorite refuge of school administrations that want to be relieved of the burden of having any responsibility for actually making decisions.

Except that it's NOT zero tolerance of religion per se, it's zero tolerance of Christianity.
It was a broader observation, concerning repetitive PR disasters schools seem have with 'Zero tolerance' policies leading to stupid results for weapons (sandwiches chewed into gun shapes, pro-Second Amendment publications confiscated as 'promoting violence'), touching (7 year olds expelled for trying to hug or kiss a classmate), or what have you.
In this particular case, the policy immediately involved seems to have been one that was actually just for the art class which may make the social studies artifacts kind of irrelevant, though the school seems to have had similar policies of broader application too.
I doubt the little bozos making the demon masks and pics had any actual religious belief in them, which will be the school's obvious attempt to weasel out of ownership of their own actions now that they've been called on it. However, since the basis of this policy and the related ones in the other classes and the school generally seems to be all about the effect on the viewer -- rather than the intent of the maker -- they really ought to end up sucking wind on that defense, since all it takes is one Evangelical Christian who finds the demon stuff offensive (as many honestly do) to stomp all over their piss-poor execution of those policies and their discriminatory treatment in meting out penalties under them.