Let's look at just one of the sports I've taken part in shall we, in this case we'll take bowls, not an Olympic sport sadly but one that will illustrate my point.
In bowls I have won titles with the world North Irish in the title. Plus I've represented the Northern Irish Civil Service therefore this would be the flag:

But in the same year I've also won tournaments with the word Irish in them and reached the later stages of Irish indoor championships which I've I'd won through would have meant me representing under this flag:
As a Civil Servant I actually won a British title therefore this flag:
Bowls is also one of those sports where your nationality is decided by the affiliation of the club side that you play for rather than you own therefore I've also be eligible to play, if I'd been or ever will be selected under these flags as well.

Now I could have also represented two of those flags at the Olympics, which would have left me with a potential dilemma should I have gold medalled at say Beijing, where I'd have only been able to celebrate wrapped in my national flag. For as you can see I'm more diverse than the criteria for the 2008 games would allow me room to be me.
Of course the real issue is that China do not want to be reminded or for the world to be shown this flag:

or this one:
You see China wishes it was homogeneous but fortunately for us, sadly for Beijing, it isn't. Therefore this Olympics is being held under a set of restrictions that try to fit us into boxes just like the Citizens of the world's most populace country without consideration that we're not all the same.
We are individuals of this world as are the athletes and supporters heading to Beijing and the citizens of China. Each deserves to have their human rights recognised even if that means not being wholly part of the nation the IOC designates them as.