Michael,
I am faaaaar from being an expert. Most of the flag looks pretty good. The stars appear to be hand sewn, but the spacing of the stitches bothers me a little. Most of the flags I've had the opportunity to examine have much tighter stitching around the stars. I'm not so sure about the St. Andrew's cross, it looks machine sewn. The double line of stitching looks a little too perfect. Now, that being said, I have come across references to machine sewing on later ANV battle flags. Without being able to see the flag in person, it would be hard for any one to give a definite assessment.
Charles