Yup. Dad fought at Saipan and Okinawa also had a flag, but I have no idea what happened to it as he died suddenly when I was a child and most of his stuff disappeared. Had it still been in the family, I would have kept it as it was a memory of Dad's WWII service. Nevertheless, it was a benevolent act on Mr. Strombo's part...
US soldiers took those flags after great personal danger, prying them from the hands of Japanese soldiers they had just killed.
To give a flag back, even 70 years later, speaks to the character of those who do it.
As to your situation, yes that flag would have been a great piece of family history for you. I would have kept it too.
Prior to my late father in law’s passing, his wished for the return of a Japanese Officer’s sword he collected from battle to the officer’s family.
My own father who had served in WWII, Korea, and Vietnam never had any of these souvenirs. He also would not allow any of the men under his command to take them either. He had seen too many of them booby trapped and was more concerned with his safety and the lives of his men.