All that was meant by the reference to the Stars and Stripes was that the National flags (the Stars and Stripes) were not carried at that time by cavalry regiments. Many people did not know that at the time Camp was interviewing veterans of the Custer Battle.

Part of Col Graham's reason for looking into the question of Custer battle flags was that Graham was himself surprised to learn that cavalry regiments didn't carry the Stars and Stripes. As you might be able to tell from John Ford's Cavalry Trilogy, Ford's techical advisor who must have entered the Army after 1903 was also unaware that the American Flag was not carried by cavalry regiments.

The Stars and Stripes company guidons were not meant to replace the national flag.

Ray