That absolutely neuters all player interaction in open. Piracy, player bounty hunting, countering BGS attack, faction warfare. The carebear types have such a fixation with "I should be able to just talk to people! The only proper player interaction is a crisp o7!". Go play in Mobius if you want that option.
You're not entirely right. You can do a lot coooperation in Open play with other players with "Wings" and "Wing Missions". You can mentor and teach players, help others look for materials on planets, help fend off NPC's during trade runs whilst tag teaming the trade markets, find minor factions to help together, Bounty hunt together. I can go on for a bit but I've already made my point.
Plus you're complaints sounds like you wouldn't like a Private and Solo mode, which is already in the game, so I don't see your point. Why are Flags a bad idea?...