As you already imagine, it depends on the wind direction, and how much interference the flag makes. Obviously if it flaps in interference, results will be off, if it contributes to localized turbulence results may be off.
I don't think it is a horrible option , but not an optimal one. I have an anemometer (Not a fine offset, not that it matters). on a tower (mounted below) my wind turbine. I know I don't get the most accurate results but I use it to compare to turbine output.
I mean, if this is the best you can do than fine, we all do things where we can.
I probably would do it in your situation.