It seems to me that the benefits of a flag far outweigh the risks. This company makes a flag with a breakaway feature, so rollover should not be an issue:
http://www.touringkayaks.com/gear.htm
I see people with fishing poles and other types of paraphernalia attached to their kayaks, so what's the problem with a flag? Maybe they should come up with method whereby the flag just rests loose into the base. That way, if a rollover occurs, then the flag just falls out when the kayak is upside down. There goes $29.95, but if it's that much of a concern that it can cause an impediment to rollover, it should be worth the price.
I am still confused as to why kayakers reject this idea. I think the State should
mandate these flags for any kayak that is 150' from shore - period.