Sounds like adapting rules for mediæval heraldry might be useful for y'all. Shields & livery, after all, were meant to be clearly visible from a distance, in poor conditions, while the viewers were in psychological distress.

Likewise, flags which use bold swathes of colour & logos are more likely to be recognisable than wordy texts.

Also some words are confusing when flapping around and some are not, depending on how many other words can be formed with the letters that are not visible. Perhaps some algorithm could be made to ascertain the flagworthiness of a string.