I know I'm in the minority here, but personally, I feel that the response by the flight crew was completely appropriate.
I grew up with many friends of the Jewish faith (attended Bar & Bat Mitzvahs, weddings). In fact most of our family friends were Jewish. I've also spent time in New York (flown in and out many times) and traveled internationally. This was the first time I have ever heard of a Tefflin.
Had I seen someone put this on while on a flight, not knowing what it was, I may very well have been alarmed too. As for praying, it's documented that the terrorists on 9/11 were praying right before killing thousands of people.
We live in a very nervous world today as a result of previous events and the flight crew did what they felt was best at the time.