Maybe it is because you (and others who react like you) don't know the concept of universal humanitarianism (maybe it's normal as Japan is so self-centered, and so much "us vs them").
Maybe you answered your own question, Mac. IF the Japanese truly are as self-centered and/or self-absorbed as you say, then they don't care what other countries/people think when those flags are flown. Until they do care or feel ashamed about them, then they will continue to be flown.

It is not only about waging war, but changing the government and the image of the country. The question is, does Japan want to be seen as the exact same country as during WWII, or a new, democratised and more peaceful country. It's a bit late to think about that as it's already 60 years the war is over.
Every country has to decide how it wants to appear before the world's eyes. Here in the U.S. many times we're "damned if we do, and damned if we don't" by the countries around us. I personally would not want to fly a flag if it were vastly offensive (going back to the Confederate flag and Nazi flag argument) but it sounds to me like Japan has decided that it doesn't care. But why doesn't she may be the better question to pose?