Like Englishmen and Scots,
or Welshmen and Scots
or Japanese and Scots
or Scots and other Scots
Damn Scots!
They ruined Scotland!!
The cost issue can be addressed easily enough by simply saying that flags will be replaced only as they need to be replaced.
Legally, the mechanism for changing the Flag is a proclamation by the Monarch.
And many countries associated with the former British Empire, Australia and New Zealand have the Union Jack in the upper right hand canton - as did Canada prior to 1964 when it flew the Canadian Red Ensign as its national flag.
Yes, and they could retain it, because it symbolises their historic link to the nation that created their nations. Their flags would not change to reflect a change in the Union Flag because the presence of the Union Flag does not reflect a current legal link, only an historical one.
Subnational units - Hawaii and the Canadian provinces of Manitoba and Ontario have the Union Jack in the upper right hand canton of their flags. Its a classic design and is not going to ever be altered.
So do all the Australian states, but again, that's a reference to their history, and there would be no reason to change that reference to their history.