Wait, sword? Make this a spear and then you're talking.
I was already thinking something about this already. Only my thoughts were more along the lines of just grabbing any flag you find and using it as a spear.
Either way, I like it. Not too sure about the colour switching part, but other than that I like it.
I always liked being able to beat people senseless with the flag in Halo, but it never made sense to me that you'd hit people with a blunt end rather than using it like a spear and/or a staff.
Would be great fun in non Flag team games too.
Couldn't you imagine, say, a team's leader (if they even have those playing online...) leading the charge carrying the team's banner and killing those that cross his path with it?
I kinda like the sound of that.