Also I'd like to direct you to some other blog posts by different people on the subject. They might be political analyses but make interesting reading:
A Yellow Guard
I particularly like Yellow Guard's idea:
"The Single Transferable Voting system that everybody in Northern Ireland is very familiar with is designed for this sort of thing. Put the Ulster Banner on the ballot with 5 others and let everybody decide on the same day as the Assembly elections in 2015."
I think its a very practical and realistic way of democratically choosing a flag. (that is the people choose a flag rather than a government committee).
Of course most political voices have responded negatively if at all, but to quote Cpt Jack Sparrow: