Marci Hamilton on the aforementioned Locke v. Davie
(must the state give money (financial aid) for religious instruction, where state gives money for secular instruction?)

Ms. Hamilton puts her thoughts on table regarding the latest Supreme Court adventure into the religion clauses of the First Amendment. Take a look to read what I leave out--a look at James Madison's Memorial and Remonstrance.
Her key graf:

So while Zelman [v. Simmons Harris (holding that voucher schemes wherein religious schools are an option do not violate establishment clause)] addressed whether the Establishment Clause permitted money to flow from the government through a private individual into religious educational coffers, Locke asks whether the government must funnel money intended to educational purposes to all possible religious uses. The answer must be "No."

First, not the important twist in this case that Hamilton highlights. Zelman was an establishment clause case--the question the was whether it is an unconstitutional state-establishment of religion to offer vouchers where the parents might choose religious schools. Since the ultimate choice is left to the parent, rather than the state, the court held there that the state did not violate the establishment clause.
In Locke, the plaintiff brings a free exercise challenge--arguing that the state's decision not to fund his religious training violates his right to free exercise of religion.
It is fairly dogmatic in our religion/first-amendment cases that direct funding of religious institutions by the government is a no no. While the government can certainly indirectly benefit religion (it is no violation for a person to spend his government-job paycheck on a Bible), the more direct funding will turn the majority of judges to the view of an establishment clause violation. Washington State is avoiding such a violation by denying Davey funding.

As Hamilton points out, Davey is working on two theories: one is to pound Zelman's principle that, in a general funding scheme (vouchers in Zelman), there is no establishment clause violation if a student ends up with religious instruction rather than secular; theory two is that the state is practicing viewpoint discrimination--favoring secular over religion.

The problem with argument one is that this isn't a general funding scheme. It also lacks the crucial ( and somewhat problematically theoretical) factor in Zelman wherein the State separates itself from the religious funding by not directly giving money to the religious institution. A voucher scheme is more like a government paycheck with which the employee buys a Bible, whereas here the government directly funds the religious training.

As for the viewpoint discrimination, I think that argument misses the boat. Washington state isn't discriminating between religious viewpoints--favoring, let's say, Judaism over Baptist training. Rather, it is refusing to directly fund any religious training.
Here, Washington is deciding on whom to confer certain benefits. Conversely, the Free Exercise clause protects persecution. It comes into play where the government impedesyour ability to practice your religion. O'Conner asked during the hearing what was the burden on Davey's religion. That the government did not give Davey money for religious training did not prevent him from seeking such training.

The government is prohibited from crafting laws that directly (after Employment Div'n v. Smith) burden religious exercise. But the government is not required to facilitate religion.