Cool stuff, Agent... I've tried to experiment with this script, but I've been getting weird results when trying to duplicate your results.
Here's my moho file before I ran Scripts->Warp->Wavy with default settings (I didn't see any angle setting)... I would have posted the file after I ran the default settings, but for some reason it went from 116k to 1.4 meg after the script ran... which seems very high since this is vector information not raster...
The way the Wavy script works is by moving points around. Your flag only has points at the corners and along the edges - everything in between is connected by straight lines. When you move those points, they will still be connected by straight lines. You need to add extra points in the middle of the stripes in order to allow them to bend smoothly.