Very interesting topic. The red palmetto flag at the Iowa Historical Museum is truly a unique relic. While I agree it is definitely a large flag, the great weight of the existing evidence suggests this flag is an early product of the secessionists in Charleston SC - and very likely connected with Morris Island - and if not the Citadel Cadets of the Star of the West Battery, perhaps one of the other forts that displayed similar flags in the period Jan - April 1861. Let me explain below why I think this is so.
The suggestion that this flag was a Confederate ensign or jack carried by a blockade runner is not supported by any evidence. I have seen only one flag with a red field and gold palmetto that was associated with a Confederate ship of the period. This was the Cecil and the flag was displayed for a special event in Dec 1860. Most all Confederate ships after 1862 followed the official CS protocol and displayed the National flag. In any event there is no record offered to support this flag being from a blockade runner.
There are however several official reports of a "red palmetto flag" flying on Morris Island during the period Jan - April 1861. The first of these is of course associated with the Citadel Academy cadets firing on the Star of the West - Jan 9, 1861. There are at least three eye witness accounts of those on board the Star of the West seeing a "red palmetto flag" flying near the masked battery on Morris Island just before it opened fire on the ship. And JO Foster, who saw the cadets at the time, wrote: that "The troops...are quartered in the buildings constituting the small-pox hospital, over one of which flies their flag a red field on which is a palmetto tree." And reports further "the flag on Fort Johnson is similar, as is also the one on Castle Pinckney."
Ladies of the Vincent family which owned most of Morris Island, SC during the beginning of the Civil War, are reported to have given a red palmetto flag to Cadets from the Citadel Academy when they arrived on the island. The Charleston Mercury records that Hugh Vincent made flags for the state - including one that flew over Fort Morris on Morris Island, and also the first palmetto flag that was hoisted at Ft Sumter in April 1861. Vincent also made palmetto flags for the Palmetto Battery, which had a white field on which a large green palmetto tree appears. If you compare the size and shape of the palmetto tree on this flag, it is very similar to the one at the Iowa museum. And - the crescent is pointed down just like the one in the Iowa Historical Society museum.
There was mention by Tom Martin that the "red palmetto flag" seen by those on board the Star of the West was actually the SC Sovereignty flag. But this appears quite unlikely - the Sovereignty flag has a large blue cross with stars and a very small palmetto tree in the upper left corner. Considering the eye witnesses on the Star of the West saw the palmetto tree from nearly a quarter mile away and made no mention of the blue cross and stars, this speculation appears to be without merit. And - actually when you consider the distance that the flag was seen from the Star of the West, it makes you think that the flag must have been quite large - similar to the one in Iowa.
Now - the connection to Culpeper's Battery. This battery was the only South Carolina unit in Mobile area during the time when the 20th Iowa Volunteer Infantry was there. Culpeper's Battery was located at Ft Blakley when the 20th Iowa attacked and overran the fort. While Culpeper's battery is officially said to have been located at Redoubt No. 9, and the 20th Iowa as having attacked Redoubt No. 4, there is also a report that Culpeper's battery was moved on the day of the battle to support the right side of the fort - near Redoubt No. 4. 1st Lt Joshua Moses commanding Culpeper's Battery was reported killed in front of the fort, to just add to the confusion.
Capt Culpeper who formed the unit was a Citadel graduate (Class 54) and at least two of his officers Joshua Moses and Perry Moses were Citadel Cadets before leaving to join the Confederate Army. Two enlisted men in Culpeper's Battery were Moses brothers, but it is not clear if they were former cadets. Why the connection to Moses brothers? Issac Harvy Moses, a citadel cadet, was a member of the Citadel Star of the West Battery. Another Moses brother was at Fort Johnson on Morris Island during this same period.
All of these connections are of course just connections not hard evidence. Did one of the Moses brothers keep one of the red palmetto flags handed out by the Vincent family on Morris Island in January 1861? Was this the flag that was flying by the Citadel Cadets masked battery on Jan 9, 1861? Was this flag in possession of one of the 4 Moses brothers at at the Battle of Fort Blakley?
Don't know these answers, but they are very likely the key to the mystery surrounding the unidentified flag in Iowa.
All very interesting questions