Can you say more? I think i'm missing the point, in my mind that would make it even worse because you have all the problems I mentioned + merge conflicts being a possibility
Well I don't think you are doing active development on your flags repo. I think it's just using Git as a database for the what are your current feature flags.
So instead of controlling flags from a website, you get the benefits of git merge, PR's, reviews, documentation etc without having to rebuild it.
I like the concept since it brings accountability. But it's just a need that larger orgs have, but by that point have likely internally built a flag system and so transitioning is difficult.
We do this at my company and another huge benefit is the ability to test config at a particular point in time. You can even git bisect to find which flag flip caused a regression.