This is one of those times when the "right" thing and the "legal" thing might not coincide.
It's not illegal to lie, unless it's done in order to defraud, done in court under oath, etc. It doesn't matter whether it's an ugly and disgusting lie, such as falsely claiming one's a Medal of Honor recipient.
I can see the court limiting the Stolen Valor Act to those cases where financial gain or the like is in question, e.g. falsely claiming veteran status while applying for a job, but I think they might reject those portions of the law pertaining to just run-of-the-mill jackasses wearing uniforms they aren't entitled to.
I know we're all about how special we are as veterans, but to put this in the court's perspective, should it be illegal to dress up in the uniform of another profession in general or say you do something you don't? There are a lot of "lawyers" and "doctors" at nightclubs who would end up in jail. It's not illegal to dress up as a cop, unless you start trying to make traffic stops on your own, e.g. use the uniform in an official capacity on a false basis.