I see two issues:
1) The government must remain secular and neutral on matters of religion. If there is any reason for the government to have a pledge of allegiance in the first place, then it should make no mention of God.
2) The government should not be in the business of educating children. For the same reason that the government must be neutral with respect to religion, it must also be neutral with respect to what constitutes a proper education, what things will be taught as the truth, etc. All education, therefore, should be privately run. If, in that context, a school wants the children to recite the pledge of allegiance with "under God" in it, or the Lord's Prayer, or even Heil Hitler, that's between the owners of the school and the parents of the children. As far as I know, private schools can still recite the pledge any way they like. The goal, then, should be to make all schools private schools so that everyone will have the same freedom.