I just spent ten minutes trying to take a million word answer and give you the tl;dr version. Here goes:

The U.S. did not stop the Plains' and other western natives' Ghost Dance due to it being "religion". It was ultimately acted upon out of fear that it was a budding rebellion/armed insurrection. The feds had already rounded up a significant percentage of the western natives by the late 1880s and were relatively concerned about more warfare stemming from the concentrated amounts of mixed natives on reservation lands (the Ghost Dance that the feds were worried about the most occurred on the Pine Ridge Reservation).

Absolutely yes. It was a suppression of the free expression of religion and carried over to the Sun Dance, Native American Church meetings, and many other Native ceremonies. One reason powwows became so popular in the 1920s and 1930s is they were legal "secular" gatherings and dances for Native peoples. Stomp dance grounds are located in incredibly remote areas to evade non-Natives. The practice of Native American religion did not become legal in the United States until the passage of the 1978 American Indian Religious Freedom Act.