"how so many are willing to go from a battlefield identification device to the official flag of the CSA."

Including the Confederate government, because they adopted it as such.

The 2nd national flag, AKA the "Stainless Banner" was adopted on May 1, 1863, incorporating the Confederate Battle Flag as the union of the flag. The 3rd national, adopted March 4, 1865, continued with the CBF as the union and added a red bar to the outer half of the field starting one half the distance from the end of the union.

If you want to get picky the CBF isn't THE battle flag, it is A battle flag and numerous variants of it were carried in different theaters, including versions that bear no resemblance to it at all. In addition, the 1st and 2nd nationals were also carried as battle flags throughout the war. For a good site on Confederate Flags, see the link below and John Coski's book.

Like it or not, the Confederate Battle Flag as we know it today, became the flag that the nation, then and now, north and south, soldier and civilian, most associates with the Confederacy.