Currently, you can get flair as HTML, Javascript, or JSON. Let's say I'm extra-cautious of XSS vulnerabilities. In that case the HTML and Javascript options are a no-no for me. JSON is possible if I use a trusted parser, but it's still just basically giving me HTML stored in a JS variable. A better option for me is a dynamically-generated image. You could cache the generated image for some time (say, 30 minutes?) to cut down on server demand.
Update: As pointed out by Kyle Cronin and rcar (see also meta.stackoverflow.com/questions/1238/…), a much greater need for this feature would be for use in sites which disallow iframes and scripting, for example when used as a sig on a forum, or when used on a blog hosted by wordpress.com.