I think this is a good decision.
In my view, the main difference between American an Europe, is that in Europe we don't let religion dictate morals. We try to dictate our own morals as a society, and have European values that are always going to be above any religious values that you might have.
You can be a Christian but if you morals contradict European values, then your religion has to adapt to society, not the other way around. You can be a Muslim but if you morals contradicts European values, then your religion has to adapt to society, not the other way around. And so on with every religion.
As a society, we are trying to agree in what those European values are. And I think that's a good thing. American society gives too much power to religion freedom - so much, that you have billionaire priests, the ten commandments in the senate of some states, the name of good on your money, some states negating birth control or abortion based on religious beliefs...
I do think woman wearing niqab is clearly a sign of oppresion. The only reason why any person would want to wear such a thing is because they have been brainwashed to make them think that's what they are supposed to do. And they are threatened with exclusion if they don't. As a society, we can't be OK with that.
I mean, you can say they wear it because they want to, but then, why is that only some muslim women wear it? How come no other women from different religions wear them? Maybe it's because it's not that awesome wearing it, and you only do it if you are brainwashed to believe that if you don't, you are going to hell and stuff like that.