The blue flag, in Lfs, is out allready when a car comes near you. If you notice ordinary IRL motorsports, they first give you the blue flag, when it it obvious, that the weak party (the car which is just to be overtaken) not are allowing the faster racer to get by him
The Lfs flagrules is far from perfect, but most of the danish Lfs society, takes it as a first warning. "prepare to get overtaken by the faster racer" it means, in our race book
We say to people, that they shall not make room in "dangerous places", such as chikanes or tigth curves. When its safe to let the upcoming racer pass you - That is the time and place
I would instantly ban a "blue flag - Let me pass" guy from my server. Its not good behaviour.