To display an image replace this part of the code:
var row = fEvent.row;
myHtml = 'mouseover:<br/>';
for (var x in row) {
if (row.hasOwnProperty(x)) {
myHtml += '<b>' + x + "</b>:" + row[x].value + "<br/>";
}
}
document.getElementById('info').innerHTML = myHtml;
With that:
var row = fEvent.row;
myHtml = '<img src="'+row.flag.value+'"/>';
document.getElementById('info').innerHTML = myHtml;
But the basic issue is that what you see on the map is the FusionTip, not the #info-div(it's placed below the map).
Disable the display of the FusionTips and place the #info-div at the desired position.
Fixed version: http://jsbin.com/EpiTODa/1
Of course it would be possible to use the FusionTip to display the flag, but this would require to modify the library, so I wouldn't suggest it.