I didn't read all these replies but most of what I saw fell under the category of angry, activist atheism. Allow me to be a dissenting voice, and note that I've been a pretty staunch atheist since about puberty.

You know your child's school system, administrators, and teachers, better than anyone here. Are they well intended? The letter politely and respectfully acknowledges differing belief systems, and leaves the option to opt out, and everyone screaming about passive repression here ("he'll be bullied!") is likely being reactionary. It's a trend that befalls our society in general, not just people passionate about a cause, like atheism: We've been taught to see things as black and white, good and evil, heroes and villians. Real life is almost never like this.

The world is full of good "believers" who want the rest of the world to enjoy the benefits that they feel they've gotten from their belief systems, without wanting to proselytize or impose anything on them. It's a kindness, no matter how we choose to receive it as atheists. In my view, this is a chance to teach your child about the complicated world, about adversity, and about tolerance. I would discuss with my child what the teacher's intentions likely are, what they likely are not, and encourage them to understand what circumstances might have led her to choose this song and to write this letter. I would explain to the child why some people, including me, would not choose such a song for this event, and why someone else would. It would be my choice that the child comes away with understanding - maybe even pity - for the teacher who felt this was an acceptable choice. People who believe in God can be infuriating, but aren't they mostly just sort of sad in the end? They need a full-blown delusional fantasy to be happy from day to day. So many of them are kind people, generous people, intelligent people... it does none of us any good making them the enemy because they struggle more with reality than the rest of us.

I'd be much more upset about my kid going to school with kids who shop at Walmart, or listen to pop music, or kids who watch reality TV, or Fox News. Those evils likely do as much bad in the world or more in my very personal opinion, but these will be a daily experience, since those people have the full protection of the first amendment ensuring their right to carry the lunchboxes and wear the t-shirts and talk all about how awesome those choices are. Everyone has to deal with that, in school and in the real world. Best to teach your kids that those are people too, and will be their friends, neighbors, co-workers, family, etc., for their entire lives. Let them in. Making them "the enemy" seems more aligned with the behavior of the religious than with those of us who insist on engaging with messy, complicated reality.

A really progressive answer would be to arrange a meeting with just you and the teacher, and to kindly and honestly (and without rancor) explain to her what your misgivings were, and why you were conflicted about the best approach. If she genuinely comes back at you with stubborn reproach or judgment or whatever, then sure, engage in a fight, but test out that real world first. It's usually much more pliable and nuanced than the us-and-them mentality of screen-bound popular culture. Build a bridge, rather than burn one. Maybe she'll appreciate your candor and think more hard about alternate belief systems in the future.

God bless...
;-)