Just as a matter of general principle I don't like the flag as a weapon. I know it's just a game, but a unit's Colors are something to be treasured and protected. Using it as a weapon is akin to dragging it through the mud.
Maybe an Officer and Flag Bearer in close proximity to each other adds some additional benefit.
Maybe a flag could be dropped, and if you recover or lose your flag to the other faction, this would have some effect.
In my opinion the flag should be really special.