Sorry I don't know - it works fine on a BI mod-folder!

For the big banners, they are named in descr_banners.txt like
faction scythia
standard_texture models/textures/standard_scythia.tga
rebels_texture models/textures/standard_barb_rebels.tga
routing_texture models/textures/standard_routing_barbarian.tga
ally_texture models/textures/standard_scythia_ally.tga
For BI folder you don't have to change the path, but re-naming your texture to something different like standard_new_scythia.tga might make it look for yours first, I'm surprised it doesn't anyway though!