I think it is problem with the colours of that flag itself - green and blue doesn't have a good contrast. Even the flag in the left upper corner irritates my eyes everytime I look on it for a short time, until I'm able to really see it clearly (the star in the middle makes it worse and I'm not even able to tell its exact colour). Shrink it and this gets worse...so I think the only solution here ould be a different flag (or different colours)
Or did I misunderstood you and you are refering to the identical flag getting more blurred for certian units vs. others? Then I'm clueless...