I still like the idea of knowing that there is something there to make you want to go back to the area to check though, so maybe yeah, eliminate ID so they only know something exists there (and get them curious). An illusory flag gives them a reason to go back now and again to check for the real thing to ID it. Especially when you do have legendary awareness so you can tell just how rare that thing might be. Plus, if some mob has something that's always illusory, you might be inclined to think there is a reason players are always using it, so that does tell you a little.

And bards in battle is a whole different discussion that would probably go well beyond this. The term illusory for the flag is just a largely unimportant aspect of this, something could be thought of as an appropriate flag that would fit into CF.

Of course, since this would largely be a task for IMPS to work on probably not fair to really ask this of them given their workloads.