Many boaters ignore dive flags anyway. Some of the instances I've seen have been downright absurd -- and would be comical if they weren't so incredibly dangerous. Abusing a dive flag in this manner only increases the "boy who cried wolf" effect, putting more divers in jeopardy. That being said, I can certainly sympathize with the folks living on points who have boats zoom so close to shore while people are swimming. The traffic volume on the Lake is escalating, as is the number of clueless and far-from-courteous boaters. People will improvise and resort to creative ways to protect their little slice of waterfront...so this is not surprising.
But, please, don't assume that a random dive flag means there's no one below the surface. Senter Cove Guy and I have done some dives in areas that would seem rather odd -- around Melvin Bay, for example -- and we certainly don't deserve props in the head because of our curiosity...