Subjectively, my own opinion would be to for the topic starter (LT) to actually provide bit more entertainment or information. Like maybe a drawing or your own imagination? (Reimu example made me chuckle for a moment). Explaining what the flag entails? You know, just to avoid from people tearing the "what-if" element apart.
Also, playing along the thread: Wouldn't it be more 'plausible' or interesting to brainstorm a flag for each faction / household? Remember how all characters had their own sigil in the official works?
Also Gensoukyo itself, regardless of a government or nation, wouldn't make sense. Gensoukyo is connected to several non-Gensoukyo locations remember? So how would that exactly work out?