Based on research, this is a rough depiction (very rough, I am afraid) of the flag that the McDonald Territory participants made in 1961. The main elements of the design are the words "McDonald" at the top and "Territory" at the bottom of the flag. The central design features a crossed rifle (appeared to be a muzzleloader or flintlock) and a fishing pole, with a jug of what would appear to be moonshine directly beneath with the traditional "XXX" marking. The design appears to be indicative of the somewhat "tongue-in-cheek" nature of the entire affair. That said, I keep in mind that some of the people of the McDonald County area took the entire affair quite seriously and even 50 years later--are still upset that McDonald County did not go ahead and secede from the State of Missouri.
http://qsl.net/kg0yh/ensign.jpg