in my view, if someone is going to go out of their way to get mad at things then it isn't really productive to try and limit them.
I think flags being visible is fine, even if it is contentious. I don't really intend this as a fix for anything regarding community drama but I do feel that there is something counter-productive to having an image flagged, approved, re-flagged and re-approved all within ten minutes.
The borders being red is fine, its a good contrast to the blue of pending images and its clearly different from parent/child posts. While the occasional image with a red border-design does throw me off, I think people's reaction to the color is associative and regardless of what its changed to, its going to be for flagging and this whole thing begins anew.