A flag isn't terrifying.
Iran, and most Muslim nations, are very attuned to symbolism. Symbolism is often more important than reality.
The idea of a red flag over this mosque is brand new. It's never been done before. So the only way to know how serious this is is by believing the Iranians.
The red flag is no more (or less) serious than their rhetoric of revenge is.
But they know that naive Westerners are frightened by things like this, hence the Daily Express calling it "terrifying."
It isn't terrifying. It is a flag.
(There is a faint precedent for the idea of a red flag meaning revenge, as there is a red flag over Imam Hussain’s shrine in Karbala, Iraq, symbolizing that his death was never avenged. Some other Shiite graves have red flags for the same reason, it appears.)