This is an interesting case. Not being an attorney I will make no attempt to examine the legal details of this. Instead, I will comment on the implications.
The largest implication I can see is that for any state to BAN prayer is enforcing a lack of faith (or a faith in nothing) as the religion of choice. The only way to not force religion on anyone is to not prevent those who DO hold faith from practicing it. Logic dictates that two things which contradict one another cannot both be true. Let's examine what happens in two scenarios.
Scenario #1: 10 people are gathered together. 8 of them have various faiths (some Christian, some Islamic, some Hindi, etc). The last 2 believe in no super-natural power, and have a faith in nothing beyond what they are able to see. Now, let's tell the 8 that they are not allowed to practice, express, or otherwise exercise their freedom of religion in a public place.
Scenario #2: Let's take those same 10 people, and tell them all that they can practice or not practice any aspect of whatever faith they do or do not have in whichever way is appropriate for their religion (provided it does NOT cause harm to any of the other 9).
Which of these two instances is freedom? Which of these two methods holds true to the principles in the foundations of our nation, and which of these methods violates an individual's rights, and restricts freedoms?