I think in a case like this a DXdiag file might not be required, though its nice to see someone actually gives it... you could use a attached TXT file for the diag though...

On to the topic: Yes I've noticed this slightly curious looking bug, and can confirm it does happen a lot...

In my opinion not a bug, nor a issue. the flag may not be illegal in 2035, who knows. and why would it be illegal in the first place IRL? (btw it isnt. just checked, no illegality there at all)
Flag of the southern states in USA is not illegal (some call it the redneck flag) even though its not a real country or anything... only real illegal flag i can think of is the nazi-germany one...

Hitting water with a bullet may shatter the said bullet or even cause a ricochet. but some of the shots should still penetrate the water.. but not all

I had no problems landing choppers, must be on your key binding settings...

For me this would be very needed since it makes my eyes hurt real quick so it needs to be able to be ticked off without removing other post-FX stuff which make the game look nicer.