The flag is includes/languages/english/images/icon.gif
Do you want to have English and Australian as two separate languages? You could copy english.php to australian.php and copy the english directory to a directory named australian. After that, you would just need to replace the flag image (icon.gif) in the australian/images directory with a like-sized australian version, replace the other images with ones with Australian wording (if necessary), and rewrite the text in all the australian files to match what you need.
Of course, maybe you just want to change English to show an Australian flag and use different wording. That would be somewhat easier. At least it would save a lot of copying.
Not really relevant to your post, but Fosters is running commercials in the US with the tag line: "Fosters, Australian for beer." In the commercials, they act as if Australian is a completely different language from the English spoken in other countries. Thus, the possibility of choosing between Australian and another language if you want to do so. After all, I've never been to Australia, so maybe it really is significantly different. I wouldn't know.
Color changes are covered in
http://wiki.oscommerce.com/helpHowtoStylesheetCatalog. You might also need to use a reference like
www.w3schools.com/css to see how to make the changes.
Good luck,
Matt
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