In examining many of these especially the higher quality ones that are in better shape/clarity, to me it appears to be a shading-shadow to give the flag a better dimentional 3-D depth effect per-se, than a horizonal stripe. Like the shading would be in the fold/crease of a flag. Just my observation and opinion on this particular notes image.

The Criswell designated T-64 $500 (CS 7th Issue notes of Feb 1864) arent exceedingly rare, but have long been near the top of the collectability market. The presence of the flag, Seal, and Jackson, as well as the crisp clarity and color of the better notes, make it high in demand with many collectors, hense the higher prices maintained for these. The $1 and $2 for the 1864 issues are much more rare, since so few were printed due to the inflation rate by that time of the war made the lower denominations hardly worth even having printed.

Frederick