[Imp]

The diffrence between captured & Allies.
If use Allies they use there own exp & morlae in other words fight as normal.
ID flag shows their country.
If use captured manned crewed by your troops so use your troops exp & morale.
ID flag shows HQ country.

Therefore using captured can use red on both sides if want without the game giving one side Civil War ID flag as they will show under HQs ID flag.