Well, after much fiddling and finding old tutorials buried on the internet, I've managed to make my flag into a HoI2 compatible (although Vickie styled - anyone got a HoI2 filter?) one. Just tried them out, the Shield works perfectly and the Flag has a very slight green haze of about a pixel in size around certain bits. I daresay it's something the experienced guys at Kaiserreich have dealt with with their eyes shut but regardless, here's my two pics for your enjoyment/berating:
Andromedos: I shifted cog to be more prominent and larger, and now the flag is a little smaller. I can post the raw file should you require it in any way.
(also, please don't think I'm forcing this on you guys or suddenly expecting this flag to make it into the mod - I really am doing this for my own enjoyment and interest, and am simply happy to help this great mod in any way that I can, should it require it. And besides, I can just mod the flag into my own installation if I want )