[Randallw]

You can indeed. Since you can mix races with flags or ships thre are 2 folders you can place your new stuff in.

For a race portrait.
empires\<new race name>
create your new race folder in the empires folder.
copy your new races pictures over current ones and save in your new race folder.

For flags.
pictures\flags.
Check the number of current flags then Copy the files from an original. there are 4, basic flags and then ships, fleets and planets. Keep in mind black is transparent so you will need to use slightly offblack instead. I use black so as to keep the flag smaller.
Edit: I should elaborate. You need to save the flags with an available number. eg. I have a Klingon flag as flag16 (there being 15 original flags)