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The picture is real. Prior to December 1942, the correct way to salute the flag was using the Bellamy salute, a variation of the old Roman salute. Lots of countries used variations of this salute, including Nazi Germany.
As the US entered the war, there was debate over the use of the Bellamy salute because of its similarity to the Nazi salute. In December 1942 (over a year and a half after the above picture), the Flag Code was amended by Congress to the "hand over heart" salute used today.