Tamar,
>I grew up in Philadelphia and don't ever remember seeing that. I assume the custom comes from the poem "In Flanders Field the poppies grow" (and that's all I know of it <g>).
If I remember correctly, the poppies were distributed in our town by the Ladies' Auxiliary of either the American Legion or VFW Post (Veterans of Foreign Wars), which were all filled with WW2-era ex-military and wives.
However, I could be wrong, since there was also a very active chapter of the Daughters of the American Revolution. Somehow, the poppies seem more connected to the first organizations I mentioned.