This issue does not concern me one way or another as I've previously indicated as being located in Canada.
While Simon is technically correct that a country flag should not make a specific poster identifiable, there is a perception being voiced that it could or does.
Considering the mind programming of a typical witness, it is difficult enough for many to read anything from an "appostate" for fear of it becoming known. Will displaying the country flag cause first time visitors to perceive that they are being identified as being here even though they may not have created an account? Will the flags cause some potential new members from creating an account?
As the country and perhaps more specific location information remains available in the background, could not a script be written to automatically flag Mods when inconsistent location data is received in a few member's postings?