The basic problem here is that you’re not looking at the church decorations like the Catholic you are; you’re looking at it in the old way. You know this stuff, but you’re still internalizing it. That’s okay.
As you know, the most important thing in the picture is that the Mass is taking place. The Mass is the greatest prayer, offering, and anything else that you can think of, and it is directed toward God the Father, offered to Him by God the Son, Our Lord Jesus Christ. It is part (a facet of a great jewel, if you will) of Jesus’ eternal offering of Himself to the Father, which He began at the Last Supper and on the Cross when He died, through the Resurrection and the Ascension, and is still being offered by Christ in Heaven. (As per Paul’ in Hebrews – all that holy of holies stuff.) Everything that’s not the action of the Mass is less important, unless it’s Christ’s Real Presence in the Eucharist.
The next most important thing is the HUGE CRUCIFIX, preaching Christ and Him crucified. Every Catholic church is supposed to have some kind of crucifix in plain view at all times, in order to keep what Christ did for us, and how much He loves us, clearly in mind.
Almost everything else in the picture is artwork. It’s artwork that’s been blessed, and it’s artwork that’s supposed to help give glory to God and draw the worshippers’ minds to holy things.
On the (east) wall behind the main altar in a church, the traditional thing is pictures of the Second Coming of Christ, or the bliss of heaven before all that with angels and saints.* Christians, since the very beginning, traditionally prayed toward the east, the direction of Christ’s ascension (as seen in OT prophecy!) and the predicted direction of His Second Coming (also as seen in OT prophecy!) Looking at pictures of Jesus in glory, or of the saints and angels in heaven, or even of just a single saint, helped them to remember what they were expecting to happen in the end, and the grace they wished to receive from Mass to help them to persevere. (It was also helpful to the priest, because of course the traditional prayer direction included the priest looking that way as well. But his major focus would have been Mass, and later on, a small crucifix standing on the altar.)
Later, you get pictures of saints living the Christian life up front above the altar, as well as in all sorts of other places. But this was generally seen as seeing the saints in the light of eternity, just as someday (if we go to heaven) we will look back on our own lives on earth as being ultimately to God’s glory, and full of His graces.
So what you’re seeing is a picture of the Virgin Mary as Our Lady of Guadelupe, a picture filled with symbolism, and portraying Mary as both the pregnant virgin of Luke and the Woman of Revelation. She is basically a symbol of what the individual Christian wants to do – bear Christ through the world – and what the Christian wants to become – sanctified by God.
So yeah, it’s fine to have an altar with a picture of Mary over it. Even if an altar is “dedicated to” a certain saint, it’s consecrated to God.
And of course, the early Christian ideal of an altar was to have not just an altar, but an altar built upon the relics of a martyr or other saint. (As seen in Revelation, with the martyrs under God’s altar!) The Mass altars of the catacombs were perhaps the biggest expression of this; but of course St. Peter’s in Rome has the main altar directly over the tomb of Peter for a reason.
The Mexican flags being so close to the altar is what’s odd about this picture! But I’m sure there’s a good rationale for their placement, too. They seem to be positioned so as to appear to be bowing to the altar; that may be it.
I hope this helps.
Mintaka
*(Over the doors in back, looking west, you’d have the Last Judgment.)