You can't change the independents flag.
You can't use different size flags for different purposes, as far as I know, either. I don't quite understand the problem, but you could check how I, or Unwise for that matter, made the flags: you'll note that the tgas are much higher than they are wide (yeah, I'm not home so I can't check the exact dimensions), and most of the upper portion is black. I think you should make the pictures in that exact same size, as then they won't be scretched or shrunk by the program. That way they look just fine (at least to me).
Can't wait to see your work!