I've read about this story on a couple of edu-blogs, and since it touches on a topic near and dear to my heart, I'll address it here too.
Bracing for the attack of all the peace, love, and tie-dye folks, I'll state categorically:
1. No, high school is not the place for you to demonstrate your individuality. It's the place for you to demonstrate your intellect and conformance to societal norms.
2. Yes, having me see your cleavage (girls) or boxers (boys) is sexual harassment, at least according to my district's sexual harassment policy. Don't tell me not to look--don't show it in the first place.
3. If a school isn't going to enforce the dress code it has, it needs to get rid of it. Mr. Chanman of Buckhorn Road (see blogroll at left) likened this to Giuliani's "broken window" theory--if bad guys see broken windows, they'll know that crime is tolerated in the area, and it goes downhill from there. If you have rules you don't enforce, that breeds contempt for all rules--which ones can I get away with breaking, and why those rules but not these? Enforce all of them, as the principal did in the linked story.
4. I don't care if you like the policy or not. I don't like having to drive 40 mph down Auburn Blvd. when it can easily handle traffic at 55 mph, but I don't have much of an argument if I were to get pulled over. Having the discipline to deal with things you don't like to deal with is a sign of maturity.
I think that's enough points. You get my point, and that was the point of writing this pointed post.
Update: Thanks to commenter mrc for pointing out what may have been a Freudian slip in typing!