FYI on the official rules for Wood Badge for the current year 2008.
Per page 26-27 of the WB Admin Guide:
Uniforms
Before a Wood Badge course, all participants and staff will receive the standard
uniform inspection sheets and will be expected to prepare uniforms that comply
with the current BSA Insignia Guide, No. 33066.
Uniforms for Participants
1. During a Wood Badge course, participants wear their official Scouting uniforms
(official Scout leader shirt, Scout pants, leather or web belt, and official socks)
with the shoulder loops signifying their Scouting program. Each person has the
option of wearing uniform shorts, long pants, or a skirt.
2. The activity uniforms for Wood Badge courses consist of uniform pants (short
or long) and a Scout T-shirt or knit shirt.
3. As the symbol of membership in Troop 1, participants will wear a Troop 1
neckerchief held in place with a participant’s woggle (prepared during the Day
One troop meeting).
4. Official Scouting uniforms will be required for wear each morning of the
course until lunch, and again in the evenings beginning with dinner. At other
times, activity uniforms may be worn.
5. Jackets of any type are acceptable. Patches on red Scout jackets must comply
with the BSA’s Insignia Guide, No. 33066.
Uniforms for Staff
1. During a Wood Badge course, staff members wear their official Scouting
uniforms (official Scout leader shirt, Scout pants, leather or web belt, and
official socks) with the shoulder loops signifying their Scouting program. Each
person has the option of wearing either uniform shorts, long pants, or a skirt.
2. As the symbol of membership in Troop 1, staff members will wear a Troop 1
neckerchief held in place with a participants’ woggle (made during the Day
One troop meeting) and Wood Badge beads. All staff members except the
course director will wear three beads. The four beads worn by the course
director signify the director’s role as Scoutmaster of Troop 1.
3. Wood Badge beads are worn only with the official uniform and not with the
activity uniform.
4. It is recommended that Wood Badge Staff members not wear more than nine
square knots on their uniforms.
5. On Day 6 of the course, staff members will wear the official Wood Badge
neckerchief, woggle, and beads.
Note: Participants and staff members are no longer required to remove
patches (square knots) from their uniforms to participate in Wood Badge.
Baseball-Style Caps
The course director and staff may elect to develop a custom baseball-style cap for
participant and staff use during the course. If such a cap is developed, it must be
provided to and worn by all participants and staff members. The cost associated
with the custom hat must be included in the participant fee, and staff members
must purchase the cap. If no custom baseball-style cap is provided, participants
and staff members may wear any appropriate Scouting cap.
Tags
Every participant will be given a preprinted identification tag (name tag) that
includes that person’s name and community, and either the name or the emblem
of the appropriate Wood Badge patrol. The identification tag for a staff member
will also include the name or a picture of the patch that indicates that person’s
staff position.
The identification tag may be worn on the right pocket of a Scouting uniform,
clipped to the collar of a Scouting T-shirt or knit shirt, or secured to a cord worn
around the participant’s or staff member’s neck.
Note: The troop scribe may want to include information on the back of
each identification tag regarding who should be contacted in the event of
an emergency.
All Wood Badge for the 21st Century courses utilize the traditional Wood Badge
patrol names, which were selected from animals found in North America: Beaver,
Bobwhite, Eagle, Fox, Owl, Bear, Buffalo, and Antelope. The order of patrol
names may not be changed and other patrol names may not be substituted.
PS As you can see the "discretion for the SM is on the baseball style hat". Under the flag patches are not allowed if you are following the offical guide to uniforming. They are "old school" when WB was much more cliquish in some councils.

That is now strongly discouraged.