First, you're right, it has to be Fonda Thomsen, not Vonda Thompson. And my understanding is that Fonda is retired, although the lab is now in the capable hands of Cathy Heffner, who worked with Fonda.
None of the Kansas flags sent to the lab have been sprayed with a sealant. I can see perhaps being sprayed (as long as the colors hold fast) with a mist of water to relax some folds. But not a sealant.
The flags are placed between two layers of a mesh called Stabiltex, and these are sewed together, encapsulating the flag. They try to be as minimally invasive of the flag as possible when it comes to sewing into the flag. Often they sew around or where there are missing elements of the flag.
That $1,000 dollars per flag sounds a little low (and that's an understatement.) I am wondering if that was money the group raised and the rest was provided by either state or private funds raised by the state.
I don't doubt that the flag is being conserved, but there's a lot about this article that doesn't make sense.