I'm running on a 750Mhz Dell laptop with no perceived problems on the flag. I have a 21" monitor so that helps out on the eyes a bit ;-]
Monitor size not a problem here! I use an IBM P201 21" trinitron (made for IBM by Sony Japan). As a test for most people on the scrolling issue, grab the scroll bar on this thread, and as you move the mouse rapidly, watch how closely the scroll bar follows the mouse cursor. Now try the same thing on the "latest posts". Big difference, since the scroll bar will not keep up with the drag of the mouse cursor. All due to the Flag graphic.
Same thing happens when I use my Microsoft Intellimouse Pro with the Intellipoint software. Using the wheel button in the autoscroll mode is vastly slower with the Flag graphic on the screen instead of just thread text. Bad user design, given equipment most use here.