The people who make the flags don't see it as a waste as long as they're getting paid for it and it deals such a minimal effect on the ozone that it's negligeable really. Either way, that has nothing to do with burning flags specifically, but rather the burning of any product.
As for burning flags, as far as I'm concerned it shouldn't be banned at all. A country's flag is the banner which represents it. It is the symbol of the country around which people will unify and recognize their pride. Americans seem to take that whole pride thing a bit far, but nonetheless that's what it is. The flag represents everything in and of the USA and therefore burning one or destroying one in any way is an incredibly strong gesture against that which the symbol stands for. In this case it's a protest against not one particular thing but the entirety of America. Its people, its cities, its customs, everything. I'm sure when someone burns a flag they don't consider the extent of their protest and maybe think they're just protesting the government or whatever, but regardless the burning of the flag is the protest of the whole. If, however, there is someone who protests all that America is and stands for, then by all means they should burn a flag and show it. This way they demonstrate their protest in a much stronger fashion than just saying it. It's like an effigy, only of something larger. On the flip side those who just burn flags and then enjoy the luxuries of America are acting hypocritically. Is hypocrisy wrong? I like to think so. Should they do it in those cases? No. But should the entire act of merely burning a flag be banned? Absolutely not. People should be free to express themselves in the best way they can as long and it causes no harm to anyone else. Burning a flag might get smoke in someone's eyes, but so could any other fire and you're not about to ban camping. If someone so strongly believes that the entirety of American society is wrong, then I say let them protest it in the strongest manner possible. Let them burn flags.