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I'll start with the US Code and then give a few thoughts on the "gray areas". Note that my use of the word "flag" in this essay refers to the US flag only.
According to "Title 4, Section 8-j." of the US Code, the wearing of the flag in the form of a pin is acceptable. In fact, for civilians it is the ONLY sanctioned use of the flag for adornment. The pin should be worn on the left side of the chest, over the heart.
Flag decals or patches, though, can only be used on the UNIFORMS of military personnel, firemen, policemen, and members of patriotic organizations. The code makes no exceptions concerning flag patches. Is a screen-printed or embroidered flag on a garment a flag patch?? Maybe or maybe not. Read on!
There is a difference between a flag and an image, replica or reproduction of a flag. A printed or silk-screened flag on a piece of clothing would be considered a replica, not a true flag since it is a part of a garment and hence cannot be flown on a staff... except perhaps your clothesline!
Commonly used replicas or stylized "pseudo-flags" which mimic parts of the flag and its colors (often used to indicate made-in-America products or Memorial Day car sales) are not mentioned specifically in the code. There are no restrictions per se on the use of replicas since they are not US flags.
(An aside... Another flag issue you don't mention is that of tattoos... either permanent or temporary. The code is also silent on this, except concerning the "flag as decoration" issue. A flag proudly displayed on the arm or chest where it can be visible to the public can be arguably said to be proper display. However, the use of a flag on a normally private part of the body would be difficult to justify as anything but a decoration since the display of the flag is traditionally a public act, not a private one. For example, if one displays a flag in a window that can be seen from inside and outside the building, the flag should be hung with the union of stars on the upper left AS VIEWED by the public. )
So if you are concerned about showing respect for the flag, I would suggest judging your use by the "spirit" of the code. That "spirit" is simply that the flag is a living thing and a representation of our young, vibrant and ever-changing country. And since the US flag is not supposed to be used as a decoration, my opinion is that the intent of the wearer should be taken into account. If a person wearing a flag T-shirt is doing so in a respectful way to show patriotism and unity or during a patriotic event, it would be (in my humble opinion) an acceptable use.
However, if you are wearing the flag to demean or deface it, or as some sort of advertising "gimmick", then that use would be unacceptable. (And if you think you might spill ketchup or Coke it, perhaps you should choose a different shirt and save the flag-adorned T for special occasions!)
Since repeated washings can damage printing on sweatshirts and T-shirts, the article of clothing should be respectfully "retired" from service when it begins to appear raggedy! You would retire it yourself, of course, since it is a replica of a flag, not a true flag. A formal flag retirement ceremony for a T-shirt would not be necessary.
In the end, these hazy flag issues boil down to this... your display of the flag is a symbol of your respect for the United States. And how YOU display it reflects not only on the flag... but on you!
(We have a full article on the correct way to display the US Flag at https://www.naturalhandyman.com/iip/infflag/usflag.html )