Can the Supreme Court Reject Argued Cases?

After reading the "Bong hits 4 Jesus" cases, Morse v. Frederick, my first reaction was to look for a reasonable compromise between the school's interest in discipline and the student's right to free speech. On second thought, I'm beginning to change my mind, and wonder if the Court should decide the case at all.

Here's why I'm wondering: In their oral argument, the judges seem to be having a hard time deciphering what the sign even means. And rightly so. "Bong hits 4 Jesus" could be comment about the ongoing debate about legalizing Marijuana. Or it could be an incitement to actually smoke marijuana. Or it could be a malicious parody of common religious bumper stickers like "Jesus (heart) you!" Or maybe -- this would be my interpretation -- it's just a nonsense sign with no discernible meaning, held up solely to cause trouble in front of TV cameras.

If the case turns on the meaning on the banner, it turns on a factual question too trivial to merit the attention of a federal court. Moreover, the legal questions then become hypothetical -- "If the sign means X, the level of First Amendment protection is Y". For what little I understand of civil procedure, hypothetical questions of law lie outside the jurisprudence of courts, so again the Supreme Court has no case worth deciding.

Whether or not this analysis is correct, here is my question: Could the Supreme Court reject the case at this stage? Suppose the Court said: "Sorry, we thought we needed to decide an important question about freedom of speech. But we were wrong. Now we realize there isn't even a federal case here. Forget we ever accepted it." Would that be a valid outcome?