I checked out your web zine, and was duly impressed. You guys have put together a quality web document. (And I'm not just saying that because my article was in it). As far as the negative comments you've had from the Administration, I would suggest you get used to such criticism.
The only way any forward progress is made in any society is by pushing the current boundaries. People like Thomas Paine, Nelson Mandela, and Harry Wu all struggled against oppressive powers, and eventually got the recognition they deserved.
Anytime anyone pushes these boundaries there will be criticism. People are inherently afraid of change. Your principal probably feels threatened by your publication, especially if he is not being granted the right to review and censor it.
And, to address your principal's concerns: the leaf of cannabis sativa is just that - a leaf. It is symbolic of many things. In your case, it showed that the 'zine was printed on hemp paper, an ecologically forward-thinking choice. If it didn't advocate the use of illegal drugs on campus, there shouldn't be a problem. If the people who write in to your letters section choose to remain anonymous, it will allow more people to openly show their true feelings without fear of retribution. Anonymous letters are routinely published in major newspapers. Your principal has no right to know who 'John Doe' is. This is in no way "bad journalism."
If you aren't allowed to distribute the 'zine anymore, find out exactly why. Get it in writing. If it is within the school rules, distribute flyers instead, saying where to pick up a copy of Oblivion, and giving the Internet Address. I'm sure local music stores will be happy to carry it. In a way, being 'banned' like this may increase the student's desire to read Oblivion. And being suspended may cause other students to view you guys as martyrs. I think the principal's actions may well backfire, and increase Oblivion's chances for success.
Keep up the fight.