I just looked back at a Sotheby's auction catalogue from 2005. They sold a piece of the "torn flag" - which I assume was genuine - for £140,000. But it was nearly 3ft square and included all 3 colours and a corner of the Union flag.
That puts this tiny fragment, of questionable provenance, into context.
An interesting spin on this is that back in 2005 the Sea Cadets embarked on a project to try and locate all known fragments of the "torn flag" and see how much of the flag could be reconstructed - graphically of course, not actually!!
The project was mentioned in an article in the Daily Telegraph. So I contacted one of the SC officers involved and shared with him all the information I had at that point.
If there are fake pieces out there it would have made the project pretty much impossible/meaningless. And indeed I assume it just fizzled out as I never heard anything more of it.

MB