This Image shows the "Southern Cross" Confederate Flag in use as a Battle Flag.  The image from the original September, 27, 1862 edition of Harper's Weekly, the most popular illustrated newspaper of the day.  The image is a sketch by A. R. Waud, a noted Harper's War illustrator. The image is captioned, "The First Virginia (Rebel) Cavalry at a Halt". The image contains a wealth of important historical detail, in addition to the Confederate Flag.

Select Picture for Enlarged View of Confederate Battle Flag illustration

You will want to select the illustration to get an enlargement to allow you to see all the historic detail in the image.  The flag is rectangular in shape.  This clearly demonstrates that the rectangular "Southern Cross" flag was indeed used as a battle flag, in addition to the standard square one.  The flag has fringe on it, as was common.  Details of the Confederate uniforms and weaponry can also be seen in the image. The rebels appear to be well equipped and well fed. Their uniforms are neat and crisp.