The flag concept seems interesting, never heard that before. The tassel, I'm told is used to disguise the movements of the sword, to confuse the opponent. Personally, I think the tassels and flags on swords and sabers nowadays are geared more toward the performance aspect (kinda like the thicker ropes and added chain links on rope darts/meteor hammers.)
Then again, it is easy to see someone seeing a flag swirling around and being all like "WTF?" before being sliced up and/or stabbed.
"Prepare your mind..." "For a mind explosion!"
-The Human Giant, Illusionators