I have no problem with antics in the stands, and the curtain could certainly be set up in the stands and be about as effective, but ...
This is being set up on the floor of the arena in an area that requires school authorization and therefore becomes a specially sanctioned activity. At that point I believe it crosses the line and is the equivalent of having the cheerleaders or dance team performing during free throws - and simulating any type of lewd, comic, or crude activity. I would be against that happening, but if this is permissible, how soon before some teams cheerleaders get into the act.
And I would also suspect there is some safety issues as well - players often leave the court at speed and out of control - all it takes is one athlete (or participant) to be seriously injured for this to go from 'comic' to tragic.
On distractions in other sports - baseball players insisted that ball parks set up neutral backdrops behind pitchers and pitchers are required to remove or cover up bling, so there are other situation where rules are imposed.