Realisticly... most boaters either do not know (lack of training), or ignore (or just miss it cause they're not looking for it), this type of flag (hell - I've seen plenty who ignore a dive boat with big-ole alpha and traditional dive flags posted as plain as the nose on your face).
Ideally... It should help keep you safe. Even at depths significantly greater than a boats keel and prop, you can avoid "trolling" lines and hooks. Of course, this supposes that the boaters know what that funny flag means!
Bottom line... flag-in-tow or not - suface slowly and carefully ("spin" around as you come up and raise a waving arm out of the water as soon as possible when surfacing). Listen for that unmistakable buzz of a boat motor and be ready to drop down quickly to a safer depth if you do hear a motor. When towing the flag, don't attach it in a way that will keep it from easily breaking free if it were to become snagged by an errant boater (better yet - don't "attach it" to your gear).
