Even a loose loop on your hand that you can easily pull off in practice, may, under the pressure of a nice friendly JetSki pulling away at speed shouting "Hey, Look what I found" remain engaged and pull you up. A quick change of depth of just a few feet may have consequences for you depending on a variety of factors, depth, length of dive, gas used, and if you, without realizing it hold your breath during the moments of some excitement.
Here in Southern California towing a flag while you are diving is...well not going to end well. Fortunately, it is not the law here. In other states and or countries it is. While teaching off the beach I am required to have (per our certification agency) a flag, but that I anchor with a screw anchor to the ocean floor and stay within the designated radius. Perhaps you don't need to tow the flag, but like with a boat flying one, just stay within a certain distance of it. I do recommend shooting a DSMB from 20 feet prior to surfacing if not coming up the anchor line to your float or boat. Keep in mind that even a dive boat flying both the Alpha Flag and the Dive Flag and with people on the boat yelling and frantically waiving have had other vessels pass within 20 feet of the anchored dive boat with divers in the water. The occupants of the offending boat have used the excuse of "it's okay, were divers too". My favorite was the boat passed between us and shore while anchored 30 meters from the rocky shore and while running directly over disabled veterans (Including multiple limb amputees) who had to dive for their lives while saying your drivers are in front of your boat" as if we could only have one group. Then they said, "Well how else am I supposed to get to the moorings (they were past us a few hundred meters)?". Hmmm, how else indeed? I had to agree with them because on the other side of the dive boat there was only 26 miles of open ocean. Couldn't possibly go that way.