The flag in question is actually the flag of the army of Northern Virginia flown by Robert E. Lee who freed the slaves at Arlington upon his inheritance.
The battle flag was flown, in variations, by all Confederate armies. The part about Lee is incorrect.
"When Lee's father-in-law, George Washington Parke Custis, died in October 1857, Lee (as executor of the will) came into control over some 196 slaves on the Arlington plantation. Although the will provided for the slaves to be emancipated "in such a manner as to my executors may seem most expedient and proper", providing a maximum of five years for the legal and logistical details of manumission, Lee found himself in need of funds to pay his father-in-law's debts and repair the properties he had inherited.[7] He decided to make money during the five years that the will had allowed him control of the slaves by working them on the plantation and hiring them out to neighboring plantations and to eastern Virginia."
"One came from Mississippi; one from J.B. Walton and E.C. Hancock, which coincided with the design of Colonel Miles. The matter was freely discussed at headquarters, till, finally, when he arrived at Fairfax Court House, General Beauregard caused his draughtsman (a German) to make drawings of all the various designs which had been submitted. With these designs before them, the officers at headquarters agreed on the famous old banner -- the red field, the blue cross, and the white stars. The flag was then submitted to the War Department, and was approved."