Perhaps my perspective is just based on what I am personally experiencing, but I have been happy to see the growth of flag football. My middle school aged son plays on a team at his school and really enjoys it, and there are lots of programs around. He would never consider playing tackle football (nor would I allow him to).
This will never serve as a replacement for tackle, especially if it never grows to the scholarship and/or pro level. But the NFL is clearly acknowledging it because I believe the pro bowl this year will include a flag game instead of the joke that the tackle pro bowl had turned into.
However, no matter what happens, people will continue to want to see the big hits, and people will continue to be willing to hit and be hit.