Though I wouldn't be too sure on the rehabilitation of Old Glory, at least in its last "modern" version as opposed to like the Betsy Ross Continental Army flag, if there had been some proper fighting in the early 20th century revolution that established the Cooperative Commonwealth. I mean imagine Blair Mountain and the violent suppression of the Bonus Army but happening multiple times in semi-regular waves of labor wars and protest marches as the collapse of old republic reaches its climax- plus redoubled race riots against blacks, Asians, immigrant Europeans esp. Jews, everyone part of the clear conspiracy to replace the white man's natural dominion with communist race-mixing, all bloodying and besmirching that star-spangled banner those racists wrapped themselves in. And all that's before we get to whatever the MacArthur-y West Point guys and the Regulars got up to in the main shooting war and the paramilitary terror of civil war.
I could see it as like the flag of a minor progressive party in something of a tame opposition- the results of the united front after bodying the reactionaries. Or like a deliberate protest statement among the youths and/or weirdos who think economic liberalization wouldn't hit them with Shock Therapy But British, being just edgy enough to still be protected by the right to expression. But like Soviet Russia purged a guy for suggesting bringing back the Tsarist flag with a hammer-and-sickle in the middle of it, for betraying the international brotherhood of socialist peoples with Russian national chauvinism or whatever. I think it would be likewise etched in the memory of Commonwealth culture that the old bourgeoise republic tried to kill and enslave them all, especially if a bunch of the Anglo-American communities et al get like real Cuban Exile brained about how everything was perfect under Calvin Coolidge and how everything would have been fine if those uppity blacks and foreign papists had remembered their place.