Happy?
- made me laugh XD. You can always stow away that Confederate flag in your own little gallery somewhere. Art is art - you're probably safest labelling anything controversial as not intended to be controversial.
Anyway - Gandhi made a lovely edit to the pole and to show how light and shadow would play on the flag - think about the shape the flag looks like from above, a bit like this: ~
Think about how the shadows will play in the tucked away areas and you can see why Gandhi did as he did, plus cloth isn't very reflective as Atnas said.
The anti-aliasing into the blue background is good on the blue part of the flag, but I don't think the red part would fade into light red before blue. Personally I'd give the flag a dark outline to help it stand out, but that's different to how a decent artist should be able to do it - selective outlining and all. Maybe someone can advise what colour you should be using there.