A great solution, overall! I find it's great for what I often need to do. I just have a few concerns:
Firstly, whenever when I flag an email in my inbox, the "Forward" icon changes into a flag (similar to that of the "flag" icon) from the standard arrow. FYI I'm using the four-icon bar in the toolbar ("Reply", "Reply All", "Follow All", "Forward").
I then changed the toolbar to show the five-icon bar ("Reply", "Reply All", "Follow All", "Follow", "Forward"). This time, whenever I flagged a message, the fourth icon in the bar (i.e. "Follow") changed from its respective arrow to that of the flag.
I'm thinking there may be an issue with the flag appearance in the fourth icons of your toolbar options.
Secondly, I'm not sure if there is a way to disable the "Follow" and "Follow All" buttons when in the "Inbox" folder (this isn't crucial) but it seems like there's a difference between this and "Reply All" when I try to reply to emails that contain multiple recipients.
Finally, just a quick question. Would something similar in nature be available on iPhone? Just wondered, as I'm quite impressed overall with it working on my new Lion MacBook Pro.