TECHNICALLY, it is "using the flag as apparel," since they are wrapping up in it like a cloak.
However, US Flag Code is not law and is meant to underline the respect and dignity due the Flag is the United States of America.
What these athletes are doing remains respectful. They are expressing love of country.
It's like the difference between disassembling and burning a flag in a respectful retirement ceremony VS. burning a flag in the street as disrespectful protest.
Progressives don't understand how intent matters, so they think they are being clever by scolding the action.