Haideri flag is symbol of respect to Ali. It is symbol of Ali as a perfect warrior.
Ali was also known as Haider. Haider means a Lion. Whenever the Muslims go on war against the infidels, they invoke his name and in veneration to warrior traits of Ali, they adopt the symbol of Haideri Flag.
Haider or Haydar is an Arabic word. It is an epithets of Ali ibn Abi Talib, the cousin and son-in-law of Prophet Mohammad. In Muslim Traditon (hadith), Sunnite as well as Shiite, the Prophet is said to have said; "There is no young hero as Ali, and no sword than 'Dhu'l iqar'". 'Dhu'l Fiqar' is the sword of Ali.
Ali and his sword is symbolized as two swords on the green flag by the warriors on who go on war. Such a flag is called Haideri flag.
Both Sunnis and Shittee revere Ali and his sword.
Such an invocation had been raised by Muslims. It was even raised by Haider Ali of Mysore and also his son Tipu Sultan.
The Subedar of Lahore had raised this flag against Banda Singh Bhadur during the Rahon Battle.
Sources: Dr. Christoph W. Marcinkowski, Associate Research Scholar, Encyclopaedia Iranica, Center for Iranian Studies, Columbia University, New York. Kate Brittlebank, Tipu Sultan's Search for Legitimacy_ (OUP, Delhi, 1997), pp. 43-44. As told on H-Asia of H-Net.