I've done this before myself; probably the easiest way to do it is just to change the CIV4ArtDefines_Civilization XML under Assets\XML\Art. Then you can specify a new flag and use whatever you like. For example, here's how I changed the original "star" flag to old glory:
<CivilizationArtInfo>
<Type>ART_DEF_CIVILIZATION_AMERICA</Type>
<Button>,Art/Interface/Buttons/Civilizations/America.dds,Art/Interface/Buttons/Civics_Civilizations_Religions_Atlas.dds,1,5</Button>
<Path>Art/Interface/TeamColor/FlagDECAL_Starsandstripes.dds</Path>
<bWhiteFlag>1</bWhiteFlag>
</CivilizationArtInfo>
I also had to change the bWhiteFlag to 1 because it looked strange.