SPATULA OF OWNED
They should make it so the flag doesnt have to be such a small file. Or make it so you can link to a graphic on a different website.
That would create problems however...People would then load enormous flags, that would cover the whole page...Not good!!!! The limit is fine.
You can make flags that are quite large if you are willing to expend a bit of effort. See this thread (http://forums.jolt.co.uk/showthread.php?t=345029) for some ideas.
They've already increased the image size once - they're not going to increase it again.
It used to be 6 KB, so be happy with what you've got.